Since it's Jan right now, the two most common will be:
■ 3 Quarters
■ 1 Year
Below, we can see CrowdStrike's cash flow over the past 9 months. The time frame is at the top $CRWD
Amateurs focus on Profits.
Professionals focus on Cash Flow.
Cash Flow Statement 101: 🧵
Since it's Jan right now, the two most common will be:
■ 3 Quarters
■ 1 Year
Below, we can see CrowdStrike's cash flow over the past 9 months. The time frame is at the top $CRWD
1️⃣ Operating Activities (Running the business)
2️⃣ Investing Activities (Investing in the business)
3️⃣ Financing Activities (Paying for the business)
There's freedom in how it gets reported, but this is the basic structure
The top line-item is NET INCOME.
You'd think this would represent the money a company puts in the bank at the end of the year.
But that's NOT THE CASE
Including:
■ Depreciation: Value of asset decreasing
■ Amortization: Expensing pre-paid cost
■ Stock-Based Compensation: Paying employees w/ equity
This covers:
■ Accounts Receivable: Sales not yet collected
■ Accounts Payable: Bills not yet paid
■ Inventory: Value of "stuff" not yet sold
The easiest way of thinking about it: this is a company's REAL net income -- on a cash (and not accrual) basis.
The first line item is very important:
CAPITAL EXPENDITURES
■ Cash spent to acquire or maintain property, plant, buildings, or equipment.
■ Cash spent to develop internally-used software
This is the money a company generates from business after paying for capital expenditures.
This is one of the most important financial metrics in my investing framework
FCF tells a very different story than NET INCOME
Consider $CRWD
📉Net LOSSES in the first 9 months of the past two years have been over $300 million
😟That seems pretty bad
1️⃣ ~$590 million in stock-based compensation (SBC).
2️⃣ ~$860 million in deferred revenue.
The latter represents fees $CRWD has already collected for service in the future. It's in the bank.
(Note: SBC *does* dilute shareholders)
💰$415 million in Operating Cash Flow in the 2021 time period
💰$668 million in Operating Cash Flow in the 2022 time period
When we do, $CRWD Free Cash Flow numbers are:
💰$315 million in the first 9 months of 2021
💰$467 million in the first 9 months of 2022
😟While it's true that $CRWD Net Income LOSSES were over $300M
🤑It's also true that $CRWD Free Cash Flow GAINS were nearly $800M
Knowing that is vitally important with stocks tanking and sources of funding drying up. The company can self-fund if it wants!
@BrianFeroldi , @Brian_Stoffel_ , and I run a live course that gives you the tools to understand financial statements with easy-to-understand examples.
Registration is only open for a few more days ➡️ https://t.co/9j51s8E9oV
DM me for a coupon code.
How to analyze a:
— Brian Withers (@StocksWithBrian) December 27, 2022
\u25aa\ufe0fBalance Sheet
\u25aa\ufe0fIncome Statement
\u25aa\ufe0fCash Flow Statement
In less than 5 minutes: pic.twitter.com/JseZux2yFJ
More from Accounting
Accounting is the language of business.
10 threads that will teach you more about accounting than any accounting degree:
1/ Who: @10kdiver
What: Understand the balance
2/ Who: @SoulFairy3
What: Income statement
3/ Who: @BrianFeroldi
What: Income statement
4/ Who: @AliTheCFO
What: Profit vs cash
10 threads that will teach you more about accounting than any accounting degree:
1/ Who: @10kdiver
What: Understand the balance
1/
— 10-K Diver (@10kdiver) February 5, 2022
Get a cup of coffee.
In this thread, I'll show you how to read and understand a company's Balance Sheet.
As investors, we should be able to judge businesses by looking at their financial statements.
And the Balance Sheet, of course, is 1 of 3 key financial statements: pic.twitter.com/6D0HA0vmEN
2/ Who: @SoulFairy3
What: Income statement
Many new investors are scared of financial statements. I don't blame them. Us accountants complicate the simplest things to keep ourselves employed\U0001f602
— Soul \U0001f4da (@SoulFairy3) December 6, 2021
Let me show you guys the Income Statement first. You honestly just need 3 numbers. Trus bob\U0001f483
Short \U0001f9f5
3/ Who: @BrianFeroldi
What: Income statement
Accounting is the language of business.
— Brian Feroldi (\U0001f9e0,\U0001f4c8) (@BrianFeroldi) July 28, 2021
If you buy stocks, you MUST learn how to read an income statement
Here\u2019s everything you need to know:
4/ Who: @AliTheCFO
What: Profit vs cash
Most founders don\u2019t understand the difference between PROFIT and CASH FLOW
— Ali Ladha (@AliTheCFO) November 2, 2021
Not knowing this difference, could leave your business without cash and push you into bankruptcy
Here are the key differences between PROFIT and CASH FLOW
//A THREAD//
Building conviction on existing portfolio stocks is complex topic. I am still learning and have only 2-3 years exp. Lot of learning is inspired from @varinder_bansal as part of omkara family, listening to old colleage @connectgurmeet on news channel and @unseenvalue posts
https://t.co/KQkupOeFzp financial statements and results on quarterly basis to evaluate whether your thesis on company is still intact through growth in revenue, profits and cash. You cannot rely only on whats app forwards or brokerage updates.
2.Quarterly Con-Calls post result covering enviornment of the sector in which company operates, future expansion plans, & companies confidence in responding to fund managers. (For eg, in my evening walks, i listen to con-calls on You tube rather than music to utilize the time.)
3. High conviction is build when you compare py qtr or py year con call scripts and see whether company giving forward statements were met in subsequent quarters or not. For eg company said they will be doing CAPEX for 100 crores in FY 2020 and then we can see current state.
4. Profits not growing qtr or qt or yr on yr is not the sign for low conviction. You need to screen the balance sheet to see if the company has taken huge R&D expenditure which they believe is right for company as they build new products for future years, then that make sense
https://t.co/KQkupOeFzp financial statements and results on quarterly basis to evaluate whether your thesis on company is still intact through growth in revenue, profits and cash. You cannot rely only on whats app forwards or brokerage updates.
2.Quarterly Con-Calls post result covering enviornment of the sector in which company operates, future expansion plans, & companies confidence in responding to fund managers. (For eg, in my evening walks, i listen to con-calls on You tube rather than music to utilize the time.)
3. High conviction is build when you compare py qtr or py year con call scripts and see whether company giving forward statements were met in subsequent quarters or not. For eg company said they will be doing CAPEX for 100 crores in FY 2020 and then we can see current state.
4. Profits not growing qtr or qt or yr on yr is not the sign for low conviction. You need to screen the balance sheet to see if the company has taken huge R&D expenditure which they believe is right for company as they build new products for future years, then that make sense
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1/Politics thread time.
To me, the most important aspect of the 2018 midterms wasn't even about partisan control, but about democracy and voting rights. That's the real battle.
2/The good news: It's now an issue that everyone's talking about, and that everyone cares about.
3/More good news: Florida's proposition to give felons voting rights won. But it didn't just win - it won with substantial support from Republican voters.
That suggests there is still SOME grassroots support for democracy that transcends
4/Yet more good news: Michigan made it easier to vote. Again, by plebiscite, showing broad support for voting rights as an
5/OK, now the bad news.
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To me, the most important aspect of the 2018 midterms wasn't even about partisan control, but about democracy and voting rights. That's the real battle.
2/The good news: It's now an issue that everyone's talking about, and that everyone cares about.
3/More good news: Florida's proposition to give felons voting rights won. But it didn't just win - it won with substantial support from Republican voters.
That suggests there is still SOME grassroots support for democracy that transcends
4/Yet more good news: Michigan made it easier to vote. Again, by plebiscite, showing broad support for voting rights as an
5/OK, now the bad news.
We seem to have accepted electoral dysfunction in Florida as a permanent thing. The 2000 election has never really
Bad ballot design led to a lot of undervotes for Bill Nelson in Broward Co., possibly even enough to cost him his Senate seat. They do appear to be real undervotes, though, instead of tabulation errors. He doesn't really seem to have a path to victory. https://t.co/utUhY2KTaR
— Nate Silver (@NateSilver538) November 16, 2018
