Reference no: EM132856642

Statement of Cash Flows - Hertz Global Holdings, Inc.

Hertz (NYSE: HTZ) is a car and equipment rental company. The car rental segment operates a fleet of approximately 285,000 cars in the United States and 150,000 cars internationally. The company's average holding period for a rental car is fifteen months in the United States and twelve months internationally. Hertz acquires many of its cars as "programs cars". For program cars, the manufacturers agree to repurchase the cars at a specified price, which is generally based on a predetermined percentage of the original car cost. This program limits Hertz's residual risk; however, typically the acquisition cost is higher for these program cars. The company was founded in 1918 and is headquartered in Park Ridge, New Jersey.

Problem 1) Hertz makes five adjustments (ignoring 'Other adjustments') to net income before including the changes in operating assets and liabilities. List each of these five items and briefly explain why each of these items is added (subtracted) from net income to calculate Net Cash Provided by Operating Activities.

Problem 2) Did receivables increase or decrease from the end of 2011 to the end of 2012? Did accrued liabilities increase or decrease from the end of 2011 to the end of 2012?

Problem 3) How much cash did Hertz pay out to investors in the form of dividends and/or share repurchases in 2012? (Ignore other financing activities.)

Problem 4) What is the largest asset reported on Hertz's balance sheet? Notice that Hertz does not separately classify assets as 'current' and 'long-term'. Do you think the largest asset is a current or long-term asset? Why?