Cash Flow

A cash flow (CF) shows inflows (receipts) and outflows (payments) of cash during a particular period. In other words, it summarizes the sources and applications of cash during a particular period. In addition, it analyzes the reasons for changes in the balance of cash between the two balance sheet dates.

The term "cash" here stands for cash and cash equivalents. It includes only those items that affect cash. It can be for the past or be projected for a future period.

In the form of notes and coins, cash is legal tender in hand or bank. Cash includes negotiable instruments,奖品债券, bank pay orders, undeposited checks,postal orders, and bank draughts.

现金等价物是短期，高度流动性和无风险资产，可以在三个月内转换为现金，并用于偿还债务。

Maintaining a健康业务需要一致的CF。经理必须意识到其重要性，并擅长分析短期和长期收益。

分析的基本部分与融资，运营，投资和利润有关。这在关键时期很有用，因为它可以在投资，贷款，偿还债务，甚至减少劳动力时做好准备。

Profits keep improving our ability to pay bills, suppliers, and employees since they are useless if we have no cash on hand.

同样，被要求在其他部门投资利润不应被视为损失。可以通过明智的投资增加利润，但是即使没有现金，即使是有利可图的业务也可能会失败。

In its most basic form, a payment (in a currency) is typically made from one central bank account to another.

The term is most commonly used to describe payments that are expected to take place in the future, are thus uncertain, and must now be forecasted using it.

A key takeaway for the following people and organizations:

• 会计人员需要知道该公司是否能够为薪资和其他紧迫的费用提供资金。
• Those looking for a clear picture of a company's ability to repay, such as potential lenders or creditors.
• 有兴趣的投资者希望查看该公司是否在财务上稳定。
• The company's stockholders.
• Company administrators are in charge of the company's governance and are accountable for ensuring it does not trade while bankrupt.
• Interested employees or contractors want to know if the company will be able to pay them.

Objectives

CF在预测未来时必须提供有关组织评估偿付能力和流动性位置的关键信息。

1. 它must eliminate all effects of different accounting methods and improve the comparability of different firms operating performances.
2. 它must provide data to assess equity, liabilities, and asset changes.
3. 它should lead to the probability assumption, timing, and amount of future cash flow.
4. 它should aid in the planning of financial activities in the short term.
5. 它should make efficient cash management possible.
6. 它must aid in the development of cash budgets and sound business policies.

Purpose

This aids in determining the sources of cash inflow and whether or not it is utilized within a specific time frame.

它is essential for proper cash planning and management and maintaining a balance between cash inflow and outflow.

投资者可以很容易地检测效率,或虫胶k thereof, with which a company generates CF.

Capital investment programs are appraised using a CF, determining their viability and profitability.

它allows for the evaluation of net assets and other financial reports.

公司的CF必须稳定和优化。

它评估了公司的整体健康状况，并使投资者，债权人和股东能够评估其财务可行性和支付运营费用的能力。

Preparing a statement of cash flows

Orders of presentation:

1. Operating activities (Direct Method or Indirect Method)
2. Investing activities
3. 融资活动

三个信息来源

1. Comparative balance sheets
2. Current income statement
3. 附加信息

Indirect and Direct methods

Companies favor the indirect method because it mainly focuses on the differences between net income and net cash flow from operating activities and is easier and less costly to prepare.

Types of Cash Flow

Different types are:

1. From operating activity

Operating activities are the main revenue-generating activities of an enterprise. As such, they include those transactions and events which enter into the ascertainment of net profit or loss of the enterprise.

The first part covers operational business activity transactions and is used to determine whether or not a company is financially viable in the long run.

它takes into account the money spent on the manufacture and selling of items. It analyzes incoming finances to determine whether or not an organization can cover operating expenses.

它tracks cash inflows and outflows directly related to a company's main business operations. Inventory and supply transactions, as well as employee salaries and bills, are examples of these activities.

为了计算正流量或负面流量，这些运营成本是从组织的净收入中扣除的，因此为什么将其称为公司的现金净收入。

When calculating it from operations, accounts payable, amortization, and depreciation are all considered.

现金影响净收入交易。

2。From investing activity

投资活动包括购买和销售长期资产，例如土地，建筑物，工厂，机械等，不持有转售。

这些活动还包括购买和销售此类投资，这些投资不包括现金当量。投资活动揭示了expenditure旨在产生未来收入和现金流量manbetx3.0手机客户端的资源产生。

The cash that goes toward a company's long-term health is recorded. This section includes cash spent on R&D, plant, property, and equipment, as analysts look for changes in capital expenditure.

增加资本支出意味着减少, which may or may not be bad. However, negatives also can indicate that a company is making strategic investments for future operations.

不断发展的企业通常在资本上花费更多。尽管投资活动的积极流量似乎是好的，但投资者通常更喜欢投资改进和创新的组织，而旨在从运营中产生现金。

Investing is fundamental even if it's negative and a result of gains and losses from investment.

3。From financing activity

Financial activities are transactions or business transactions or business events that affect long-term liabilities and equity. In other words, financial activities are transactions with creditors or investors used to fund either company operations or expansions. These transactions are the third set of cash activities displayed on the statement of cash flows.

Financing denotes an organization's financial strength and reveals how well its capital structure is accomplished. In addition, it provides an overview of the cash associated with business financing, which is reported to shareholders annually.

它depicts how cash is used to fund debts, equity, and dividends flow between owners, investors, and creditors.

By analyzing this section, we can determine what an organization has paid in share buybacks and dividends. It is also useful in determining how an organization will fund its operational expansion.

This section lists the cash from capital fundraising and the loans given back. A positive flow in financing indicates that an organization's money is coming in faster than it is. Conversely, negative figures are typically associated with debt payments, dividend payments, or stock buybacks.

Shareholders and investors in a company will want to get the most profit out of their investments. As a result, information about an organization's payables and receivables is critical. Moreover, it is an efficient way of gathering critical information about money flow into and out of business.

Although it can be done once a year, companies should evaluate their CF more frequently to show investors how healthy their businesses are and to have a clear financial picture for strategic planning.

例子

摩根大通（JPMorgan Chase＆Co

In 2021, JPMC's yearly FCF was $78,08百万，比2020年下降了197.71％。

In 2020, JPMC's yearly FCF was$-79,91million, down 2052.83 percent from 2019.

JPMC的年度FCF是$4,0922019年百万，比2018年下降了73.79％。

Income Statement

JPMC generated revenue of $121,65 million and earnings of $4,650 million in the previous year. The profit per share was $15.36.

Free CF is a financial performance indicator computed as operating - capital expenditure.

Income Statement

细节	数量
Revenue	12165M
Gross Profit	12165M
营业收入	5031m
税前收入	5773M
Net Income	4650m
EBITDA	6566m
EBIT	5773M
每股收益（EPS）	$1536M

Balance Sheet

该公司拥有7408.3亿美元的现金和5489.4亿美元的债务，净现金头寸为1919亿美元或每股65.33美元。

Balance Sheet

细节	数量
Cash & Cash Equivalents	74083m
总债务	54894m
净现金	19190M
净现金Per Share	6.533亿美元
Book Value	29413
Book Value Per Share	10014M
Working Capital	n/a

The formula involved for the calculation terms are:

液体资产(Acid Test) = [Current Assets – Stock – Prepaid Expenses]

Current Assets=手头现金 +银行现金 +应收账单 +短期投资 +债务人 +预付费用 +股票（成品股票 +原材料的股票 +正在进行的工作）

The Liquidity ratio of the company shows consistent over the years.

Net Profit ratio: The relationship between the net profit that a Company earns and the sales of that company is mathematically given by the Net Profit Ratio.

The calculation of the term is:

Operating Net Profit = Operating Net Profit / Net Sales *100

The net profit margin of the company has been on an increasing trend over the years

meaning that the net profit has increased with sales.

Return on Assets

JPMC在过去五年中的历史回报（ROA）数字。

Return on assets (ROA) is a measure of a company's profitability concerning its total assets. Divide a company's operational earnings by its total assets to arrive at this figure.

Return on Assets

Date	Net income	总资产	Return on Assets
March 31, 2022, <	$40,500M	$3,954,690M	1.07%
March 31, 2021	$38,830M	$ 3,6893.4亿美元	1.15％
March 31, 2020	$28,320M	$ 3,139,430万	1.00%
March 31, 2019	$ 31,22.2万美元	$ 2,737,1900万	1.18％
March 31, 2018	$ 24,83330万	$ 2,609,79.9亿美元	0.97%

Return on Equity:

JPMC's current and historical return on equity (ROE) values over the last five years.

The amount of net income returned as a percentage of shareholders' equity is known as the return on equity. Return on equity is a metric for determining a company's profitability by disclosing how much profit it earns with the money invested by shareholders.

Return on Assets

Date	Net income	总资产	Return on Assets
March 31, 2022	$40,500M	$285,900M	14.01％
March 31, 2021	$38,830M	280,7.1亿美元	14.18％
March 31, 2020	$28,320M	$ 261,2.6亿美元	10.79%
March 31, 2019	$ 31,22.2万美元	$259,840M	12.09%
March 31, 2018	$ 24,83330万	$ 256,200m	9.65％

结论

A cash flow can reveal a company's strength, profitability, and long-term future prospects. A company can help determine whether it has enough liquidity or cash to pay its obligations. It can also help a company budget by forecasting future cash flow.

For investors, it is a barometer of a company's financial health, as the more cash available for business operations, the better. However, this is not a firm rule. For example, extending a company's activities might occasionally result in negative flow.

An investor can understand how much cash a company earns and thoroughly understand its financial well-being by studying its cash flow.

Researched and authored by Akhilesh Jagtap|LinkedIn

Free Resources

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• Cost of Equity
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