Cash Flow Statement

This is an example of the indirect method of calculating operating cash flow. We start of with net income and work backwards by adding non cash charges, such as deferred income tax and depreciation. We also subtract gains from sales of investments and add back losses from investments. After adjusting net income for non cash charges we subtract increases in receivables and inventory (such as spare parts and supplies) and add increase of payables. Operating cash flows is the sum of changes in operating asset/ liabilities and the adjustments to net income.

Operating Cash Flows

Income Before Dividends	92565

Adjustments to reconcile Net Income to net cash
Provided by Operating Activities:

Deferred Income Taxes	3961
Depreciation and Amortization	25771
Equity Loss from Investment in other Entities	2036
Other , Net	2855

Sum of Adjustments to Net income	34623


Changes in Operating Assets and Liabilities:

Increase in Restricted Cash	-2009
(Increase) decrease in accounts receivable	-3003
(Increase) decrease in amt due Continental Air.	8353
(Increase) decrease in Spare Parts and supplies	894
(Increase) decrease in Prepayments and other Assets	-6816
Increase (decrease) in Prepayments and other Assets	-224
Increase (decrease) in Prepayments and other Assets	-7680

Sum of changes in oper asset/liab	(10,485.00)

Operating Cash Flows	116703

Investing Cash Flows
Capital expenditures	-27543
Purchase of flight equipment from Continental	0
Proceeds from the sale of property and equipment to Continental	397
Proceeds from disposition of equipment
Sale (purchase) of short term investments
Investments in and advances to consolidated and other entities	-6414

Investing Cash Flows	-33560

Like all investing cash flow statements, capital expenditures is the first entry. This is referred to commonly as “purchases of property plant and equipment”. The second and third items also fall into the same category except that XJT itemized them separately.

Investments in affiliate companies include “investments in and advances to consolidated and other entries”. Investments or sales of investments of tradable securities include “ sale (purchase) of short tem investments”.

Financing Cash Flows
Dividends payable	0
Repurchase of common stock	0
Payments on notes payable to Continental Airlines	-17545
Payments on long term debt and capital lease obligations	-1642
Redemption of note related to Series A Preferred Stock	0
Proceeds from the issuance of common stock	391
Proceeds from sale-leaseback transactions	0

Financing Cash Flows	-18796

XJT has not declared any dividends or been active in share buybacks. They have issed 391 000 USD worth of additional equity. “Payments on notes payable to Continental Airlines” and “Payments on long term debt and capital lease obligations” refer to payments of long term borrowing, which are the principle payments of the face value of loans.

Total Cash Flow	64347
Free Cash Flow	89160
Beginning of the year cash	227285
End of year cash	291632

Total cash flow is simply the sum of operating, investing and financing cash flow.

Free cash flow is capital expenditures subtracted from operating cash flow.

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Cash Flow Statement

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