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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
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What is 9Free !ash Flo9 an8 Wh1 ;oes It
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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
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(n8ing !ash B
: &A &A
Free !ash Flo
>
tions>
ies2 from the
>
r"e.
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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
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lance: $ %%0
: $ 50
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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.%# $.4%
Cash &'o( from Operations Gro(th Rate: 2.% +.+%
#eenue is "ertainl roin oer time2 ut C and Ca/ ima"t
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Reca': So What ;oes Free !ash Flo
ain for more emloees2 more on Ca/2 more a"3uisitions2 rea det2 inest in o
assets2 u other "omanies2 issue diidends or reur"hase shares2 send on CF
Hsed in a 1C< analsis (ariation)2 86O analsis2 and standalone roth 9 @nan"ial stat
analsis2 to determine a "oman=s alue2 det reament "aa"it2 hat else it mih
ith the e"ess "ash it enerates.
/ense "uttin> Ca/ or orin Caital "hanes>
in"onsistent2 or eense9Ca/ "uttin is driin it.
!nd een orse is hen DamesD and a""ountin immi"s are ae"tin
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maDon - F!F (xcer't 4rom Financial Statements:
Eear 3 Free !ash Flo !alculation: Eear 5$ ?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
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n hae
her
ement
do
rtin the i"ture.
.
roth>
hen it=s
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Sales4orce - F!F (xcer't 4rom Financial Statem
Eear ) Eear 3 Free !ash Flo !alculation:$ 42*0 $ ,247, Cash
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or erhas een issue diidends or reur"hase shar
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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
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s in the future.
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