It's actually even better than that, because the "financing" number is negative: they're buying back stock shares in order to keep the value high.īy the way, note that the Operations section looks strange because the signs are all backwards for example, depreciation is an expense, but you're adding it. This company has a "healthy" cash flow: cash provided by operations is more than sufficient to cover cash used for investing. (Financing causes problems: issuing new stocks will lower the value of each individual share issuing bonds commits them to making interest payments which will punish future earnings). If you're interested in the stock of this company, you'd like to see that they can pay for the "investing" figure out of the "operations" figure, without having to turn to "financing". The third section shows how the company is spending cash, Investing in its future growth. Operations means "making" money by selling goods and services Financing means "raising" money by issuing stocks and bonds. The first two sections show the two ways the company can get cash. The three sections of the cash flow statement - Operations, Financing, and Investing - correspond to the three solid green arrows back in the diagram. (click on highlighted text for more information)Ĭhange in cash and equivalents during year Positive numbers represent cash flowing in, negative numbers represent cash flowing out. The Cash Flow Statement shows how the company is paying for its operations and future growth, by detailing the "flow" of cash between the company and the outside world
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