Dow Chemical 2013 Annual Report Download - page 73

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LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents of $5,940 million at December 31, 2013 and $4,318 million at December 31,
2012, of which $2,030 million at December 31, 2013 and $845 million at December 31, 2012 was held by subsidiaries in
foreign countries, including United States territories. For each of its foreign subsidiaries, the Company makes an assertion
regarding the amount of earnings intended for permanent reinvestment, with the balance available to be repatriated to the
United States. The cash held by foreign subsidiaries for permanent reinvestment is generally used to finance the subsidiaries'
operational activities and future foreign investments. A deferred tax liability has been accrued for the funds that are available to
be repatriated to the United States. At December 31, 2013, management believed that sufficient liquidity was available in the
United States. However, in the unusual event that additional foreign funds are needed in the United States, the Company has the
ability to repatriate additional funds. The repatriation could result in an adjustment to the tax liability after considering
available foreign tax credits and other tax attributes.
The Company’s cash flows from operating, investing and financing activities, as reflected in the consolidated statements of
cash flows, are summarized in the following table:
Cash Flow Summary
In millions 2013 2012 2011
Cash provided by (used in):
Operating activities $ 7,823 $ 4,075 $ 3,879
Investing activities (1,469) (2,687) (1,994)
Financing activities (4,731) (2,530) (3,362)
Effect of exchange rate changes on cash (1) 16 (121)
Cash assumed in initial consolidation of variable interest entities — — 3
Summary
Increase (Decrease) in cash and cash equivalents $ 1,622 $ (1,126) $ (1,595)
Cash and cash equivalents at beginning of year 4,318 5,444 7,039
Cash and cash equivalents at end of year $ 5,940 $ 4,318 $ 5,444
Cash Flows from Operating Activities
Cash provided by operating activities increased significantly in 2013 compared with 2012 primarily due to increased earnings,
which were positively impacted by the K-Dow arbitration award, and a reduction in working capital. Cash provided by
operating activities improved in 2012 compared with 2011 primarily due to a decrease in working capital and an increase in
dividends received in excess of equity earnings from nonconsolidated affiliates which more than offset decreased earnings and
higher pension contributions.
Net Working Capital at December 31
In millions 2013 2012
Current assets $ 24,977 $ 23,684
Current liabilities 11,971 11,493
Net working capital $ 13,006 $ 12,191
Current ratio 2.09:1 2.06:1
Days-sales-outstanding-in-receivables 46 46
Days-sales-in-inventory 70 71
Net working capital increased from December 31, 2012 to December 31, 2013 principally due to increases in cash and cash
equivalents. At December 31, 2013, trade receivables were $4.9 billion, down from $5.1 billion at December 31, 2012. Days-
sales-outstanding-in-receivables (excluding the impact of sales of receivables) was 46 days at December 31, 2013, flat
compared with December 31, 2012. At December 31, 2013, total inventories were $8.3 billion, down from $8.5 billion at
December 31, 2012. Days-sales-in-inventory at December 31, 2013 was 70 days compared with 71 days at December 31, 2012.
Cash Flows from Investing Activities
Cash used in investing activities in 2013 was primarily for capital expenditures, including projects related to the Company's
U.S. Gulf Coast investments, which was partially offset by proceeds received from the sale of businesses and assets, including
the sale of the Polypropylene Licensing and Catalysts business in the fourth quarter of 2013. Cash used in investing activities in
2012 was primarily due to capital expenditures. Cash used in investing activities in 2011 included increased capital
expenditures, which were partially offset by proceeds from the divestiture of the Polypropylene business.