Boston Children's Hospital Massachusetts Statement ✓ Solved

Sheet1boston Childrens Hospital Boston Massachusettsstatement Of Ca

Boston Children’s Hospital; Boston, Massachusetts Statement of Cash Flow

Cash Flows from Operating Activities

Net earnings: $10,334

Adjustments to reconcile net earnings to cash flows from operating activities:

• Depreciation and amortization of property and intangibles: $3,939
• Stock based compensation
• Noncontrolling interest: $339
• Asset write-downs and impairments: $2
• Deferred tax provision
• Accounts receivable allowances

Changes in assets and liabilities, net of effects from acquisitions:

• Increase in accounts receivable
• Increase in inventories
• Increase in accounts payable and accrued liabilities: $2
• Increase in other current and non-current assets: -$2
• (Decrease)/increase in other current and non-current liabilities: -$2

Net cash flows from operating activities: $15,385

Cash Flows from Investing Activities

• Additions to property, plant and equipment: -$2,384
• Proceeds from the disposal of assets: $1
• Acquisitions, net of cash acquired: (Note -$269)
• Purchases of investments: -$13,788
• Sales of investments: $14,101
• Other (primarily intangibles)

Net cash used by investing activities: -$4,854

Cash Flows from Financing Activities

• Dividends to shareholders: -$6,804
• Repurchase of common stock: -$12,797
• Proceeds from short-term debt: $3,874
• Retirement of short-term debt: -$6,565
• Proceeds from long-term debt: $4,118
• Retirement of long-term debt
• Proceeds from the exercise of stock options/excess tax benefits: $2,226
• Other: -$83

Net cash used by financing activities: -$20,980

Effect of exchange rate changes on cash and cash equivalents

(Decrease)/increase in cash and cash equivalents: -$9,545

Cash and cash equivalents, beginning of year: (Note -$810)

Cash and cash equivalents, end of year: (Note 1) $14,911

Supplemental Cash Flow Data

• Cash paid during the year for:
• Interest:
• Income taxes: $2,442

Supplemental Schedule of Non-Cash Investing and Financing Activities

• Issuance of common stock associated with the acquisition of Synthes, Inc.: $13,335
• Treasury stock issued for employee compensation and stock option plans, net of cash proceeds
• Conversion of debt - Acquisitions
• Fair value of assets acquired: $19,321
• Fair value of liabilities assumed and noncontrolling interests: -$1
• Net fair value of acquisitions: $17,269
• Less: Issuance of common stock associated with the acquisition of Synthes, Inc.: $13,335
• Net cash paid for acquisitions: $4,269

Paper For Above Instructions

The statement of cash flows for Boston Children’s Hospital provides a detailed overview of cash flows from operating, investing, and financing activities. Analyzing this statement is essential for stakeholders to understand the hospital's financial health and operational efficiency.

Beginning with cash flows from operating activities, the net earnings of $10,334 are adjusted for various factors involving depreciation, amortization, and changes in non-cash working capital accounts. The addition of $3,939 for depreciation reflects the hospital’s investment in long-term assets that support its operations. The adjustments aim to reconcile the net earnings to the actual cash generated from primary activities, a crucial aspect for evaluating operational performance.

Operating cash flow is crucial for maintaining day-to-day operations. Despite the complexities in the adjustments, the net cash flows from operating activities totaled $15,385, indicating a healthy operational cash flow which is vital for Boston Children’s Hospital's sustainability.

Next, the cash flows from investing activities show significant expenditures, notably a $2,384 outlay on property and equipment. This reflects ongoing investments to enhance facilities or upgrade technology, essential for maintaining competitive advantage and improving patient care. Furthermore, cash outflows for the purchase of investments and other intangibles illustrate proactive measures to secure financial futures. The net cash used in investing activities was recorded at -$4,854, which is not uncommon for hospitals that are in a growth or improvement phase.

Analyzing financing activities helps stakeholders comprehend how the hospital funds its operations and growth initiatives. Cash inflows from long-term debts amounting to $4,118 have been utilized, alongside strategies for repurchasing common stock and paying dividends, as seen through outflows of $20,980. This indicates a balanced approach of returning value to shareholders while simultaneously leveraging debts for growth.

At the end of the period stated, the adjusted net cash position reflects a decline in cash and cash equivalents, with a stated end balance of $14,911. It is critical for Boston Children's Hospital management to monitor cash reserves to ensure financial liquidity, especially in unpredictable health service environments.

Investment in cash flow data suggests prudent financial management practices. The supplemental cash flow data provides insights into expenses related to interest and income taxes, crucial information for understanding the true financial pressure the hospital faces. Interest payments will demand cash regardless of operation profitability, and paying income taxes reflects compliance with regulatory frameworks—two factors that need careful planning.

Additions to cash flow from invincible structures arose from non-cash investing and financing activities. For instance, the issuance of stock related to the acquisition of Synthes, Inc. showcases a strategic expansion move aligning with the hospital’s growth objectives. Such acquisitions not only enhance service offerings but may significantly contribute to future revenue streams.

In conclusion, the Cash Flow Statement of Boston Children's Hospital serves as a critical financial document that indicates how effectively the organization manages its cash position. Those interested in financial analysis, such as investors, creditors, and hospital administrators, can derive substantial insights from detailed cash flow patterns, guiding future decision-making strategies.

References

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