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. The advantage of cash flow statements for analysts is that they are less prone to accounting adjustments because of total dependence on cash inflow and outflow.

The cash flow statement mainly has the below three 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 moreCash 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 moreCash 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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#2 – Walmart Cash flow Statement

Walmart is a multinational retail organization with a chain of supermarkets, especially in the USA. It has 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 the components of its cash flows:

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 has lots of physical assets such as buildings, warehouses, etc. These are getting depreciated yearly, which is being recorded in Net Income because of the accounting process, but that depreciation is added back again in cash flow. It also has a very strict policy in its working capital. That’s why you will see its 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 change almost negligible or zero while its accounts payable is increasing every year, which helps overall increase its cash balance.

Walmart spends much 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,” which is almost consistent each year.

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 from 2016 to 2018

#3 – Software AG Cash Flow Statement

Software AG was the 2nd largest software vendor in Germany, with 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:

Source: softwareag.com

The main components of investing activities can be investing in “property, plants and intangibles” and acquiring 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 for the change of “Cash flow for investing Activities” from -60 million Euro to -73 million Euro.

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 around 90 million euros. That is why its net cash from financing activities has decreased from (-80 million Euro to -107 million Euro).

Overall, 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 despite 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 a 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

Cash flow from Operations for TCS is steady at around Rs. 25,000 cr in both 2017 and 2018, almost the same as the Net Income for the firm.

Cash flow from Investments mainly consists of the purchase of investments, including 709 crores (March 31, 2017: 890 crores). 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.

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 around Rs.11,000 cr, the two main components of its Cash flow for financing activities.

  • Cash Flow from Operations Ratio FormulaFormula of Free Cash FlowFund Flow Statement MeaningCalculate Operating Cash Flow