Cingular Case Essay

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1. For Cingular, the primary investing activities are: A. Construction and capital expenditures B. Investments in and advances to equity affiliates. These activities were financed using the income (adjusted for cash basis) generated from operating activities and financing activities. The net cash provided by the operating activities is one of the ways that can be used to finance these investments and capital expenditures. Also, they can use the money provided from the financing activities from the contributions of the members. And finally, companies usually reinvest the money left in their retained earnings account after payment of dividends. However, that is not shown in the cash flow statement because the cash flow does not show the retained earning account. 2. The maturity date of these CDS can range from one month to five years; however, since they are not classified as investing activities, then the maturity date for these CDS are to near (to small period); hence, it is to be treated as a cash equivalent. These purchases are NOT reported under any classified activity in the statement of cash flow, because they are reported as a total with the cash (represented at the end of the statement). (i.e. If cash is invested in these investments, the cash decreases by the same amount that the cash equivalent increases; later on, when cash is withdrawn, the cash increased by the same decrease in the investment) Except the case if they were sold at a gain, the gain would be reported under operating activities which is not a part of the situation here. 3. Issuance of debt securities and issuance of equity securities are classified as Financing Activities in a statement of cash flows. Issuance of bonds and other debt and equity securities are included as cash inflows resulting from external financing. Therefore, the issuance and repayment of debt securities and

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