Discuss in detail how cash from operating activities is determined in both the methods

In its heyday, Consolidated Electric was an industry leader in the wages and benefits that it paid its employees. Their pension plan was among the best in the business. Additionally, when employees retired, the company continued to pay their premiums for participation in the corporate health insurance plan. In recent years, health insurance premiums soared, while Consolidated’s profits declined as a result of foreign competition and the need to make major investments in plant and equipment.

The Board is considering whether to discontinue health insurance benefits for retirees. The VP of Human Resources points out that many retirees depend on this company benefit and might not be financially capable of obtaining alternative insurance at their own expense. She argues that at the very least, the company is ethically obligated to continue benefits for current retirees. The CFO counters that Consolidates first priority is its shareholders, who expect profits to be maximized.

Explain Consolidates legal and/or ethical obligation to continue the health insurance benefits for retirees.


As an example, the HR function may at times appear to be the “police” for the organization from an employee and supervisor perspective since one of the responsibilities is to ensure that the policies and procedures and the employment laws are complied with to protect the organization from some serious litigation. At other times from a management perspective the HR Director may appear to be too “employee friendly” in supporting enhancements to the benefit program or providing developmental opportunities for employees. This requires the HR Director to be very adept at “walking that thin line” and providing the myriad of services considering the impact of those services on both management and employees. Comments?



Let’s start with the basics. What is the purpose of the statement of cash flows? Why would we want to convert accrual basis net income to cash basis when creating the statement of cash flows? Differentiate between these three activities: a) operating, b) financing, and c) investing. Provide at least two unique examples for each category (don’t repeat what your classmates have listed). Please let me know if you have any questions


Class, what are the two methods to prepare cash flow statement? Discuss in detail how cash from operating activities is determined in both the methods. Describe the entire process. Please let me know if you have any questions

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