scussion Questions

Download Pfizer’s 2015 annual report (search for Pfizer Investor Relations). Locate the firm’s consolidated statement of cash flows and answer the following items:

  • Does the firm employ the direct or indirect method of accounting for operating cash flows?
  • Why does the firm account for the changes in balances in operating accounts (e.g., accounts receivable, inventory, and accounts payable) in determining operating cash flows as net of acquisitions and divestitures?
  • Describe the accounting for cash paid for business acquisitions in the statement of cash flows.
  • Describe the accounting for any non-controlling subsidiary interest and any other business combination–related items in the consolidated statement of cash flows.

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