Cash Flow Statement with Examples
A cash flow statementCash Flow StatementA Statement of Cash Flow is an accounting document that tracks the incoming and outgoing cash and cash equivalents from a business.read more is a financial statement that provides a detailed analysis of how the cash inflows and outflows happened because of its operations and any external investment and financing in the given accounting period. Combined with the Balance Sheet and Income Statement, the Cash flow statement describes the overall financial health of a firm. The advantage with cash flow statements for analysts is that it is very less prone to accounting adjustments because of total dependence on cash inflow and outflow.
The cash flow statement is mainly having below 3 components:
- Cash flow from Operating ActivitiesCash Flow From Operating ActivitiesCash flow from Operations is the first of the three parts of the cash flow statement that shows the cash inflows and outflows from core operating business in an accounting year. Operating Activities includes cash received from Sales, cash expenses paid for direct costs as well as payment is done for funding working capital.read more
- Cash flow from Investing ActivitiesCash Flow From Investing ActivitiesCash flow from investing activities refer to the money acquired or spent on the purchase or disposal of the fixed assets (both tangible and intangible) for the business purpose. For instance, the purchase of land and joint venture investment is cash outflow, while equipment sale is a cash inflow.read more
- Cash flow from Financing ActivitiesCash Flow From Financing ActivitiesCash flow from financing activities refers to inflow and the outflow of cash from the financing activities like change in capital from securities like equity or preference shares, issuing debt, debentures or repayment of a debt, payment of dividend or interest on securities.read more
Examples of Cash Flow Statement
Below are some practical examples of the Cash flow statement to understand it better.
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Source: Cash Flow Statement Examples (wallstreetmojo.com)
#1 – Amazon Cash Flow Statement
Let us discuss the example of Amazon Cash flow statement for the Year 2014, 2015, and 2016 below and discuss various factors that have affected its cash flow.
We can see that Amazon’s Ending cash from 2014 to 2016 has increased from $14.6 Bn to $19.3 Bn. Let’s start discussing all 3 components of cash flows one by one:
#1 – Cash Flow from Operating Activities
source: Amazon SEC filings
Amazon’s cash flow for Operating activities has increased from around 6.8 Bn to 16.4 bn (more than double in just 2 years), which is quite impressive. One reason for that is an increase in revenue of Amazon mainly because of AWS. From 2015 to 2016, Amazon has some good inventory management policies because of that, its “change in inventory” is going down despite an increase in revenue.
#2 – Cash flow for Investing Activities
Its “Cash flow from Investing Activities” primarily consists of buying property or buildings. Because of the expansion, investment on a property, etc. has increased from around $5 Bn to $7Bn. Since maturities of marketable securitiesMarketable SecuritiesMarketable securities are liquid assets that can be converted into cash quickly and are classified as current assets on a company's balance sheet. Commercial Paper, Treasury notes, and other money market instruments are included in it.read more are quite short, every year, Amazon sells some of its securities and buys other ones mainly because of hedging purposes. The amount of bought Securities will be shown as negative cash in this section since cash goes out while buying them while sold securities will be shown as a positive amount.
#3 – Cash Flow from Financing Activities
Financing ActivitiesFinancing ActivitiesThe various transactions that involve the movement of funds between the company and its investors, owners, or creditors in order to achieve long-term growth are referred to as financing activities. Such activities can be analyzed in the financial section of the company's cash flow statement.read more means taking loans, debts, etc. for buying assets. In 2014, Amazon bought a long term debtLong Term DebtLong-term debt is the debt taken by the company that gets due or is payable after one year on the date of the balance sheet. It is recorded on the liabilities side of the company's balance sheet as the non-current liability.read more of around 6.4 Bn to expand its business. That’s why in 2014, it is having positive cash flow from financing, but negative in 2015 and 2016 because now it is trying to pay off its debt.
#2 – Walmart Cash flow Statement
Walmart is a multinational retail organization which is having a chain of supermarkets, especially in the USA. It is having a net income of more than $10 Bn per year. From 2016 to 2018, its cash has decreased from $8.7 Bn to $6.8 Bn. Let’s see components of its cash flows:
#1 – Cash flow for Operating Activities
Source: WMT-2018_Annual-Report
Its Cash from Operating Activities has changed from USD 27.5 Bn to $28.3 Bn. One of the major components is the depreciation of buildingsDepreciation Of BuildingsDepreciation of building refers to reducing the recorded cost of a building until the value of the structure either becomes zero or reaches its salvage value. In addition, it helps to map the revenue in the form of lease rental generated during the corresponding expenses.read more. Walmart is having let of physical assets such as buildings, warehouses, etc. These are getting depreciated each year, which is being recorded in Net Income because of the accounting process, but that depreciation gets added back again in cash flow. It also has a very strict policy in its working capital. That’s why you will see its change in inventory and account receivableAccount ReceivableAccounts receivables is the money owed to a business by clients for which the business has given services or delivered a product but has not yet collected payment. They are categorized as current assets on the balance sheet as the payments expected within a year. read more almost negligible or zero while its accounts payable is increasing every year, which helps overall in increasing its cash balance.
#2 – Cash Flow from Investing Activities
Walmart spends a great deal of its revenue on investing in its retail store and buildings. You will see the main component of Cash flow for Investing activities in “Payment of Property and Equipment’s,” which is almost consistent each year.
#3 – Cash flow for Financing Activities
Because of the heavy CapexCapexCapex or Capital Expenditure is the expense of the company's total purchases of assets during a given period determined by adding the net increase in factory, property, equipment, and depreciation expense during a fiscal year.read more purchase of buildings, it has to take a great amount of debt each year. Its Cash flow for financing has changed from -USD16.2 Bn to -$19.9 Bn for 2016 to 2018
#3 – Software AG Cash Flow Statement
Software AG was 2nd largest software vendor in Germany, with revenue of around 900 million euros in 2017. Its net income in 2017 was around Euro 141 million with “cash and equivalentsCash And EquivalentsCash and Cash Equivalents are assets that are short-term and highly liquid investments that can be readily converted into cash and have a low risk of price fluctuation. Cash and paper money, US Treasury bills, undeposited receipts, and Money Market funds are its examples. They are normally found as a line item on the top of the balance sheet asset. read more” at around Euro 366 million. Let’s look through various cash flow segments for this company:
#1 – Cash flow for Operating Activities
Source: softwareag.com
Its Cash flow from Operations has decreased from Euro 203 million to 189 million. One of the differences between the structure of the above 2 companies (Amazon and Walmart) cash flow (which were GAAP standardGAAP StandardGAAP (Generally Accepted Accounting Principles) are standardized guidelines for accounting and financial reporting.read more) and Software AG (which is IFRS) is that in the above 2 companies, the tax is shown in an only one-line item, known as a deferred tax. But here in the second row, the total tax amount for the year has been added in one line, and in the other line, the tax amount paid has been subtracted.
#2 – Cash flow for Investing Activities
The main components of investing activities can be investing in “property, plants and intangible” and the acquisition of other companies. Software AG’s investment in property, the plant has been doubled from 2016 to 2017 (from 13 million Euro to 25 million Euro), which is the main reason of the change of “Cash flow for investing Activities” from -60 million Euro to -73 million Euro.
#3 – Cash flow for Financing Activities
in 2017, Software AG repurchased treasury sharesTreasury SharesTreasury Stock is a stock repurchased by the issuance Company from its current shareholders that remains non-retired. Moreover, it is not considered while calculating the Company’s Earnings Per Share or dividends. read more worth of around 90 million euros. That is why its net cash from financing activities has gone down from (-80 million Euro to -107 million Euro).
Overall by looking at the change in Cash and equivalents, 2017 was not a healthy year for Software AG. Its net cash decreased in 2017 by 9 million in spite of having a net income of Euro 141 million.
#4 – TCS Cash Flow Statement
TCS (Tata Consultancy Services) is the biggest software company in India, with revenue of around 123,000 crores Rupees in 2018 and a net income of around 26,000 crores Rupees. It is a cash-rich company with cash and equivalents of around Rs. 5,000 crores in FY 18 compared to Rs. 4,000 crores in FY 17.
Source: TCS.com
#1 – Cash flow from Operating Activities
Cash flow from Operations for TCS is steady at around Rs. 25,000 cr in both 2017 and 2018, which is almost the same as Net Income for the firm.
#2 – Cash flow from Investing Activities
Cash flow from Investments mainly consists of the purchase of investments include 709 crores (March 31, 2017: ` 890 crores) and proceeds from disposal/redemption of investments include ` 1,182 crores (March 31, 2017: ` 726 crores) held by TCS Foundation, formed for conducting corporate social responsibility activities of the Group.
#3 – Cash flow from Financing Activities
In FY 18, TCS bought back sharesBought Back SharesShare buyback refers to the repurchase of the company’s own outstanding shares from the open market using the accumulated funds of the company to decrease the outstanding shares in the company’s balance sheet. This is done either to increase the value of the existing shares or to prevent various shareholders from controlling the company.read more worth Rs. 16,000 cr from the market. Also, it paid dividends of around Rs.11,000 cr, which are the 2 main components of its Cash flow for financing activities.
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This article has been a guide to Cash Flow Statement Examples. Here we discuss, analyze, and explain practical examples of Cash flow statements, including Amazon, Walmart, Software AG, and TCS. You can learn more about financing from the following articles –
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