Cash management profiles across time— A mature firm

The following information was taken from the 2008 annual report and statement of cash flows of Eli Lilly, a major pharmaceutical (dollars in millions):*

2008

2007

2006

Net income (loss)

$(2,072)

$2,953

$2,663

Net cash from operations

7,296

5,155

3,976

Net cash from investing activities

(7,269)

(4,328)

608

Net cash from financing activities

(2,346)

(845)

(4,579)

Change in cash

2,276

111

103

“Change in the cash balance does not always equal We SLIM of cash from *maims. investing. and financing due to adjustments for exchange rate changes

REQUIRED:

a. Discuss the cash management profile of Lilly across the three-year period. Where did the company get its cash, and what did it do with it?

b. Explain how the cash management profile relates to the company”s financial condition and performance over this time period.