In Its 2018 Annual Report to Shareholders, Henchman & Co

question 156

Essay

In its 2018 Annual Report to Shareholders, Henchman & Co. provided the following Statement of Cash Flows:

$$\begin{array} { | l | r | r | } \hline \text { Years ended December 31 (\$ in millions) } & 2018 & 2017 \\\hline \text { Financing Activities } & & \\\hline \text { Proceeds from issuance of long-term debt } & 1,491 & \\\hline \text { Proceeds from equity security units } & 690 & \\\hline \text { Borrowings under lines of credit } & 1,173 & \\\hline \text { Repayment of borrowings under lines of Credit } & ( 1,306 ) & ( 175 ) \\\hline \text { Principal payments of long-term debt/lease } & & \\\text { agreements } & ( 119 ) & ( 485 ) \\\hline \text { Proceeds from issuance of stock } & { 8 2 5 } & 19 \\\hline \text { Dividends paid } & ( 158 ) & ( 114 ) \\\hline \text { Other financing activities } & \underline{( 64 )} & -\\\hline \text { Net cash provided by (used in) financing } & & \\\text { activities } & { 2 , 5 3 2 } & ( 755 ) \\\hline \text { Increase in cash and cash equivalents } & 145 & 177 \\\hline \text { Cash and cash equivalents at beginning of year } & \underline{319} & \underline{142} \\\hline \text { Cash and cash equivalents at end of year } & \underline{\$ 464} & \$ \underline{319} \\\hline\end{array}$$

-What method (direct or indirect) does Henchman & Co. use to present its Statement of Cash Flows? Explain how you can determine which method is used.

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