Refer to the ﬁnancial statements of Urban Outﬁtters given in Appendix C at the end of this book (or at http://www.sec.gov/Archives/edgar/data/912615/000119312512146029/d276682d10k.htm).
1. Does Urban Outfitters use the direct or indirect method to report cash ﬂows from operating activities?
Answer: Indirect Method
2. What amount of tax payments did the company make during the most recent reporting year?
(Hint: The statement of cash ﬂows may be helpful to answer this question.)
Answer: Tax payments of $ 120,847 thousand were made (located near the bottom of the Statement of Cash Flows)
3. Explain why the “share-based compensation” and “depreciation and amortization’ items were added in the reconciliation of net income to net cash provided by operating activities.
Answer: “Share-based compensation” and “depreciation and amortization” is added back to net income to determine cash flows from operations.
4. Has the company paid cash dividends during the last three years? How do you know?
Answer: No. The company has not paid cash dividends during the last several years since its initial public offering. Any dividends paid would be ﬁnancing cash ﬂow.
5. What was free cash ﬂow for the year ended January 31, 2012? (Dollars in thousands).
Cash Flows from: Operating Activities: $ 282,702
Less: Dividends: 0
Less: Capital Expenditures: 190,010
Free Cash Flow: $ 92,692
Please provide explanations for these questions.
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