no BS plz,
Your answer is wrong. Here's the correct answer and how to derive it.
Start with cash flow from operations for the nine months ending Feb 28 2009, which according to the statement was ($170,017).
Next, back out what the company tells you are the non-operating cash flows from the statement of cash flows from operations. I know that seems like a non-sequitur, however, the mere fact that Spongetech incorporates non-operating cash flows into its operating cash flow statement ought to be a major red flag in and of itself, but that's another discussion that you and I don't need to have.
However, if you look at the statement, the company **tells you** that they've included non-operating sources of cash flow for the reporting period -- in this case, the proceeds from the sale of stock amounting to $9,722,405 which are a financing cash flow instead. So you have to back that out of the statement of cash flows from operations to have a rough proxy for operating cash flow -- or (179,017) + (9,722,405) = ($9,901,422).
That's a rough proxy for how much cash SPNG took to the bank (or, if a negative number like the above, it shows how much cash was consumed from various sources) through the company's ordinary, ongoing, day-to-day business activities for the nine months ending Feb 28 2009 -- in this case ($9.9 million).
To the extent that my question "doesn't make sense" that's only because you've never heard of Warren Buffett or have never bothered to read anything he's ever written. Had you done so, you'd know that this particular step is the first step Buffett goes through (among many others) in evaluating investments. He likes to call it "owner earnings" since (if it's a positive number) it represents the unencumbered cash flows which are available to be distributed to the owners of the company. Buffett also backs out maintenance capex expenditures as well since, obviously, money spent by the company for PP&E isn't available to be distributed to the shareholders either. That's a rough proxy for what Buffett would call "free cash flow", and Buffett's a guy who loves companies that throw off excess amounts of free cash and has gotten very rich by being able to identify them at valaution levels that are attractive.
And for Spongetech, that number is negative and it's big ($9.9 M) which means that Spongetech is consuming cash, not generating it, and is a big number in any case in relation to the size of the company. Moreover, the number is getting increasingly negative which suggests the company's business is actually deteriorating, not improving.
Of course, it's possible to obfuscate this through the use of accrual accouting gimmicks, and Spongetech is doing exactly that. Hence the huge increase in A/R balances without any reserve for bad debt, stock sales that are shown as sources of operating cash inflows and are noted as non-operating items, and so forth.
And by the way, the capex expenditures for this company are minimal, but can be found in the section of the cash flow statement for investing activities -- and amounted to a grand total of $672 for the nine month period. So, SPNG is not exactly what you'd call a hub of internally-generated growth either.
Of course, it wouldn't hurt to teach your students something about Buffett since he's a self-made guy and is very good at what he does. But that would require a paradigm shift in thinking about the whole process of investing and how to go about evaluating companies as ongoing economic entities. And since you're long Spongetech, I don't think it's gonna happen.
Otherwise, it's 6:35 here, no 10-K has been filed for today's due date (no surprise there whatsoever) and life is looking very, very good for tomorrow.
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