Acct Business

Anonymous
timer Asked: Oct 22nd, 2018
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Question Description

The following is the 2016 statement of cash flows for PulteGroup, Inc.

PULTE HOMES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the 12 months ended December 31

($ thousands)

2016

2015

2014

Cash flows from operating activities:

Net income

$ 602,703

$ 494,090

$ 474,338

Adjustments to reconcile net income to net cash from

operating activities:

Deferred income tax expense

334,787

311,699

223,769

Write-down of land and pre-acquisition costs

19,357

11,467

11,168

Depreciation and amortization

54,007

46,222

39,864

Stock-based compensation expense

22,228

24,752

29,292

Loss on debt retirements

657

--

8,584

Other, net

1,614

(4,865

)

(2,566

)

Increase (decrease) in cash due to:

Inventories

(897,092

)

(917,298

)

(337,939

)

Residential mortgage loans available-for-sale

(99,527

)

(104,609

)

(53,734

)

Other assets

(45,721

)

(175,150

)

(46,249

)

Accounts payable and other liabilities

75,257

(23,898

)

(38,646

)

Net cash provided by (used in) operating activities

68,270

(337,590

)

307,881

Cash flows from investing activities:

Capital expenditures

(39,295

)

(45,440

)

(48,790

)

Investment in unconsolidated subsidiaries

(14,539

)

(454

)

(9

)

Cash used for business acquisition

(430,458

)

--

(82,419

)

Other investing activities, net

13,100

11,330

8,605

Net cash used in investing activities

(471,192

)

(34,564

)

(122,613

)

Cash flows from financing activities:

Proceeds from debt issuance

1,995,937

498,087

--

Repayments of debt

(986,919

)

(239,193

)

(250,631

)

Borrowings under revolving credit facility

619,000

125,000

--

Repayments under revolving credit facility

(619,000

)

(125,000

)

--

Financial services borrowings

63,744

127,636

34,577

Stock option exercises

5,845

10,535

15,627

Share repurchases

(603,206

)

(442,738

)

(253,019

)

Dividends paid

(124,666

)

(115,958

)

(75,646

)

Net cash provided by (used in) financing activities

350,735

(161,631

)

(529,092

)

Net increase (decrease)

(52,187

)

(533,785

)

(343,824

)

Cash and equivalents at beginning of period

775,435

1,309,220

1,653,044

Cash and equivalents at end of period

$ 723,248

$ 775,435

$1,309,220


Required:

a.

In determining operating cash flow in 2016, the company includes share-based compensation expense of $22,228 thousand. Why does the company add this amount?

b.

The operating section in 2016 includes an increase in cash of $75,257 for “Accounts payable, accrued and other liabilities.” Explain this reconciling item.

c.

Does the composition of PulteGroup’s cash flow statement present a “healthy” picture? Explain.

Tutor Answer

Fleming51
School: Carnegie Mellon University

Attached.

1
Running head. PULTE HOMES, INC.

Pulte Homes, INC
Name
Institutional affiliation

2
PULTE HOMES, INC.

(a) Share-based compensation is an expense which is paid along with common stock
rather than the cash. Therefore, since it does not involve cash, the share based
compensation is added back to the net income in order to determine the ca...

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Anonymous
Good stuff. Would use again.

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