02 24 Free Cash Flow

7/25/2019 02 24 Free Cash Flow

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Breaking Into Wall Street - The 3 Financial Statements

($ in Thousands)

Tax Rate: 40.0%

Income Statement: Balance Sheet:

Revenue: $ 700 ssets:

Cost of Goods Sold (COGS): 70 !urrent sset

"ross #rot: %30 Cash:

Gross Margin %: 90.0% Short-Term I

!""ounts #e

&'erating (x'enses: Inentor:

Sales & 'aretin: *+, reaid /

#esear"h & 1eeloment: 7, Total !urrent

General & !dministratie: ,0

Total &'erating (x'enses: )*0 +ong-Term ssroert2 la

1ere"iation: *0 Goodill:

!morti5ation of Intanile !ssets: *0 Other Intan

Sto"-6ased Comensation: 0 8on-Term In

Total +ong-Ter

&'erating Income ,(BIT: 300

Operating Margin: 42.9% Total ssets:

Other In"ome 9 (/enses): 0 +ia.ilities / (ui

Interest In"ome 9 (/ense): (0) !urrent +ia.ili

Goodill Imairment: (,0) #eoler (Sh

&/ rite-1on: (*0) !""ounts a

Gains 9 (8osses) on Inestment Sales: (*,) !""rued /

1eferred #e

#re-Tax Income ,(BT: ))2 Total !urrent

In"ome Taes: ;0 +ong-Term +ia

Current ortion: 40 1et:

1eferred ortion: ,0 1eferred Ta

Total +ong-Ter

et Income ,#rot 4ter Taxes: $ 532Net Income Margin: 19.3% (uit1:

Common St

#etained /ar

Treasur Sto

!""umulate

Total (uit1:

Total +ia.ilitie


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B+!( !6(

Ta.le o4 !ontents 4or This +esson:

*. hat


3/17

What is 9Free !ash Flo9 an8 Wh1 ;oes It


4/17

Start o4 (n8 o4

#erio8 #erio8 !ash Flo Stat

!ash Flo 4ro

: Bet In"ome:

$ ?00 $ ++0 1ere"iation:

estments: - - !morti5ation

eiale: - ,0 Sto"-6ased

- ?0 Goodill Im

nses: - ?0 &/ rite-1

ssets: 300 770 1eferred In"o

(Gains) 9 8oss

ets: !hange in &'ent & /3uiment: - ?0 Chane in !"

*00 ,0 Chane in In

ile !ssets: ,0 40 Chane in r

estments: - *00 Chane in !"

ssets: 520 ))0 Chane in !"

Chane in 1e

$ >20 $ **0 !ash Flo

1: !ash Flo 4ro

ties: Caital /e

ort-Term 1et): $ - $ ,0 ur"hases of

ale: - *, ur"hases of

enses: - *0 ro"eeds fro

enue: - *, !ash Flo

ia.ilities: - *0

!ash Flo 4ro

ilities: 1et #aised:

- 40 1et rin"ia

8iailit: - ,0 #eoler Issu

+ia.ilities: - )*0 /3uit Issuan

1iidends IssShare #eur"

" & !dditional aid-In Caital: ,0 *70 !ash Flo

nins: 400 4,

: - (,0) F? Rate (@ect

Other Comrehensie In"ome: - ,

$ >20 $ %50 et !hange in

s / (uit1: $ >20 $ **0 Beginning !as


5/17

(n8ing !ash B

: &A &A

Free !ash Flo

>

tions>

ies2 from the

>

r"e.


6/17


7/17

ement:

&'erating ctivities:

$ *?,

*0

of Intanile !ssets: *0

omensation: 0

irment: ,0

on: *0

me Taes: ,0

es on Inestment Sales: *,

ating ssets / +ia.ilities:ounts #e"eiale: (,0)

entor: (?0)

aid /enses: (?0)

ounts aale: *,

rued /enses: *0

ferred #eenue: *,

4rom &'erations: $ )30

Investing ctivities:

ditures (Ca/): $ (,0)

Short-Term Inestments: (*00)

8on-Term Inestments: (*00)

ST Inestment Sales: ,

4rom Investing: $ ,5%2

Financing ctivities:

$ ?00

l #eament: (+0)

ed 9 (#eaid): ,0

"e: *00

ed: (,0)hases: (,0)

4rom Financing: $ )*0

: ,

ash: $ 3%0

Balance: $ 300


8/17

lance: $ %%0

: $ 50


9/17


10/17

What ;oes Free !ash Flo $ 507>2 $ 5)%*3

!hanges In !ertain ssets an8 +ia.ilities: Eear 5 Eear )

!""ounts #e"eiale: $ (7;+) $ (+*4)

Inentories: (?277) (27,;)

!""ounts aale: 2+7 *20+*

!""rued 8iailities: (;?,) 7*

!""rued Taes: ;;4 ;*

et !hange in ,&'erating Working !a'ital: ,5777 ,50%0

!nnual #eenue: $ 4*2?;, $ 44+2,0; $ 4+2+,*

!nnual Bet In"ome: *+2;;? *+2?7 *727,+

Net Change as a % of Reen!e: "0.4%# "0.2%#

Net Change as a % of Net Income: "10.$%# ".0%#

&ree Cash &'o( Gro(th Rate: "1.$%# 1$.1%

Cap)* as a % of Cash &'o( from Operations: ++.,% +0.4%

Cap)* as a % of Reen!e: 3.0% 2.$%

Reen!e Gro(th Rate: .0% +.0%

Net Income Gro(th Rate: "3.%# $.4%

Cash &'o( from Operations Gro(th Rate: 2.% +.+%

#eenue is "ertainl roin oer time2 ut C and Ca/ ima"t


11/17

Reca': So What ;oes Free !ash Flo

ain for more emloees2 more on Ca/2 more a"3uisitions2 rea det2 inest in o

assets2 u other "omanies2 issue diidends or reur"hase shares2 send on CF

Hsed in a 1C< analsis (ariation)2 86O analsis2 and standalone roth 9 @nan"ial stat

analsis2 to determine a "oman=s alue2 det reament "aa"it2 hat else it mih

ith the e"ess "ash it enerates.

/ense "uttin> Ca/ or orin Caital "hanes>

in"onsistent2 or eense9Ca/ "uttin is driin it.

!nd een orse is hen DamesD and a""ountin immi"s are ae"tin


12/17

maDon - F!F (xcer't 4rom Financial Statements:

Eear 3 Free !ash Flo !alculation: Eear 5$ ?2,7 Cash ) Free !ash Flo: $ )25% $ )0*)

Eear 3 !hanges In &'erating ssets an8 +ia.ilities: Eear 5

$ (,++) !""ounts #e"eiale: $ (++)

(*2++7) Inentories: (*2777)

,?* !""ounts aale: 2;;7

*0? !""rued 8iailities: *20+7

(*24) 1eferred #eenue: 4?

,))3 et !hange in ,&'erating Working !a'ital: 5>%>

$ 47+2;4 !nnual #eenue: $ ?4204 $ 42077

*+2+;, !nnual Bet In"ome: *2*, +?*

"0.%# Net Change as a % of Reen!e: 3.0%

"1.9%# Net Change as a % of Net Income: 232.0%

"20.1%# &ree Cash &'o( Gro(th Rate: "1.9%#

+.4% Cap)* as a % of Cash &'o( from Operations: 4.4%

2.$% Cap)* as a % of Reen!e: 3.$%

1.% Reen!e Gro(th Rate: 40.%

".0%# Net Income Gro(th Rate: "4+.2%#

"9.1%# Cash &'o( from Operations Gro(th Rate: 11.,%

1eends on ho useful ou t

isF erhas>

Bot reall Dlain amesD ith orin Caital2 ut it is interestin

hae "haned oer time - the !""ounts aale "hanes reall stand

redu"es "ash o for !ma5on.

h


13/17

n hae

her

ement

do

rtin the i"ture.

.

roth>

hen it=s


14/17

Sales4orce - F!F (xcer't 4rom Financial Statem

Eear ) Eear 3 Free !ash Flo !alculation:$ 42*0 $ ,247, Cash


15/17

or erhas een issue diidends or reur"hase shar


16/17

nts:

Eear 5 Eear ) Eear 3$ ,; $ 7?7 $ 7,

(*,) (*7+) (;;)

$ >>0 $ 2%5 $ 27%

Eear 5 Eear ) Eear 3

$ (4,) $ (*?) $ (4,)

(*+7) (??) (+,)

() (*0) *0,

0 *;? (;)

44, 47; +*

502 )>7 ,5

$ 2+7 $ ?20,0 $ 4207*

(*) (70) (?)

4.% $.1% "0.0%#

"90,.+%# "91.4%# 0.+%

19.+% 2,.% 2.,%

2+.% 23.$% 34.2%

.,% +.$% ,.3%

3.$% 34.% 33.+%

"11.%# 223,.1% "14.2%#

2$.$% 24.% 1$.$%

uite a itF and then rose in Eear ?.

to Cash


17/17

s in the future.

02 24 Free Cash Flow

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