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May 01, 2023


Answer 1

The list of five items that were added or subtracted from net income to calculate cashflow from operating activities along with its reason for addition or subtraction are listed below:

  1. Depreciation of revenue earning equipment – Depreciation of an equipment is generally a non-cash item of expenses, because it is usually an ongoing charge on the carrying amount of the asset. Operating cashflow begins with net profit but since the income statement is prepared using accrual concept of accounting it may include some expenses that may not be incurred in actual, it is due to this reason non-cash items like depreciation are added back.
  2. Depreciation of property and equipment- same reason is applicable for depreciation on property plant and equipment, this do not have direct impact on the cashflows generated by the company (1). The net profit of Hertz global holdings includes depreciation expense which is a non-cash items thus it must be added back (2).
  3. Amortization of other intangible assets- this is also a non-cash item similar to depreciation which is treated as an expense while calculating net profit of the company. Thus, amortization expense of intangible asset must be added back.
  4. Stock-based compensation charges-Similar to depreciation and amortization expenses of intangible asset, Stock-based compensation charges is also a non-cash expenses, which is added back to profit to improve the operating cashflows which is actually not paid in cash.
  5. Gain on sale of property and equipment- since a gain on sale of asset is a non-cash event it gets deducted from the net income while calculating cashflows from operating activities (3).

Answer 2

The receivable of Hertz global holdings Inc had increased from the year 2011 to 2012. This is reflected in the cashflow from operating activities of the entity.

The accrued liability of Hertz global holdings Inc had decreased from the year 2011 to 2012. This is shown as changes in operating assets and liabilities of the company while calculating consolidated cashflow from operating activities.

Answer 3

Hertz global holdings Inc have paid $ 2232290 to its investors for repurchasing its shares and paying dividend during the year 2012.

Answer 4

The largest asset reported in Hertz balance sheet is non-current asset of the company amounting to $ 19718705. We have considered the largest value of asset as non-current asset despite the fact that only total asset of the company is reflected in the balance sheet of the company because the revenue earning equipment values, property plant and equipment values, value of other intangible assets net and goodwill of the company together form non-current asset of the company which is larger than the current assets value of the company comprising of remaining assets.

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