The cash flow statement is presented in the quarterly and annual company filings
Most people want to be an investor
But most investors don’t know how to read a cash flow statement
Here’s how to read a cash flow statement:
The cash flow statement is presented in the quarterly and annual company filings
-Is operating cash flow positive or negative? (Positive)
-Is capital expenditures less than OCF? (Yes)
-Is the company buying back stock or issuing new shares? (Buying back)
These are 3 simple questions to ask yourself before reading one
-Cash from operating activities
-Cash from investing activities
-Cash from financing activities
These are the 3 main components of every cash flow statement.
Cash flows from operating activities explains the cash flows within the business for its normal operations over a particular period.
This will show whether a company is capable of generating positive cash flow to maintain and grow its operations.
The most important thing when looking at operating activities is to make sure the number is positive.
If the number is positive this means it is generating more money than it’s spending for the normal operations.
If the number is negative this means the company could be in major long term trouble. They will most likely have to take on debt to fund their company.
If a company is taking on debt to fund their operations, they will not survive
Cash flows from investing activities comes from the profit and losses from investments that the company has made
Any long-term physical or intangible asset that the company expects to deliver value in the future will be included
Common line items in this section include:
-Purchase of Property, Plant, and Equipment (PP&E)
-Proceeds from disposal of PPE
-Proceeds from sell of stocks
-Acquisitions
Cash Flow from financing activities explains the cash flows used to fund the company’s operations and payback their shareholders along with creditors
Common line items include:
-Borrowing of long-term debt
-Repayment of Long-term debt
-Repayment of short-term debt
-Proceeds from stock options
-Proceeds from stock offering
-Repurchases of Common Stock
-Dividends Paid
The most important numbers you can gather from the cash flow statement is free cash flow
FCF tells investors and analysts how much cash a business generates after growing and maintaining it’s business
This cash can be paid to shareholders as a dividend, be used to pay down debt, buyback shares or to just keep as cash on balance sheet
This is a very important metric to gauge when valuing a stock
You should look for a company with FCF of 10%+
Learning how to read and analyze these are crucial when purchasing individual stocks
In closing, the cash flow statement shows how much cash different activities generate (or cost) a particular business over time
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Starts the night before.
9 evening habits that make all the difference:
1. Write down tomorrow's 3:3:3 plan
• 3 hours on your most important project
• 3 shorter tasks
• 3 maintenance activities
Defining a "productive day" is crucial.
Or else you'll never be at peace (even with excellent output).
Learn more
How to be 5x more productive.
— Ben Meer (@SystemSunday) August 1, 2022
A best-selling author\u2019s 3-3-3 Method:
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Create a short shutdown ritual (hat-tip to Cal Newport). Close your laptop, plug in the charger, spend 2 minutes tidying your desk. Then say, "shutdown."
Separating your life and work is key.
3. Journal 1 beautiful life moment
Delicious tacos, presentation you crushed, a moment of inner peace. Write it down.
Gratitude programs a mindset of abundance.
4. Lay out clothes
Get exercise clothes ready for tomorrow. Upon waking up, jump rope for 2 mins. It will activate your mind + body.
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The benign product is sovereign programmable money, which is historically a niche interest of folks with a relatively clustered set of beliefs about the state, the literary merit of Snow Crash, and the utility of gold to the modern economy.
This product has narrow appeal and, accordingly, is worth about as much as everything else on a 486 sitting in someone's basement is worth.
The other product is investment scams, which have approximately the best product market fit of anything produced by humans. In no age, in no country, in no city, at no level of sophistication do people consistently say "Actually I would prefer not to get money for nothing."
This product needs the exchanges like they need oxygen, because the value of it is directly tied to having payment rails to move real currency into the ecosystem and some jurisdictional and regulatory legerdemain to stay one step ahead of the banhammer.
If everyone was holding bitcoin on the old x86 in their parents basement, we would be finding a price bottom. The problem is the risk is all pooled at a few brokerages and a network of rotten exchanges with counter party risk that makes AIG circa 2008 look like a good credit.
— Greg Wester (@gwestr) November 25, 2018
The benign product is sovereign programmable money, which is historically a niche interest of folks with a relatively clustered set of beliefs about the state, the literary merit of Snow Crash, and the utility of gold to the modern economy.
This product has narrow appeal and, accordingly, is worth about as much as everything else on a 486 sitting in someone's basement is worth.
The other product is investment scams, which have approximately the best product market fit of anything produced by humans. In no age, in no country, in no city, at no level of sophistication do people consistently say "Actually I would prefer not to get money for nothing."
This product needs the exchanges like they need oxygen, because the value of it is directly tied to having payment rails to move real currency into the ecosystem and some jurisdictional and regulatory legerdemain to stay one step ahead of the banhammer.