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Just understood something in 16 minutes that my 12th grade teacher was trying to explain me for literally 6 months.. Really appreciated it.🙏🙏

This series has changed everything for me. Thank you! What helped me even more is re-listening to this video and your other ones in this series at a reduced playback speed of .75 %. It slows down the speed of speech so I'm able to really comprehend everything. I wrote notes down and now I know how to analyze a companies financial health.

This video gives me so much clarity in analyzing a cash flow statement. I was struggling with this for weeks. Thank You, thank you, thank you!

Title: "Mastering the Cash Flow Statement: A Comprehensive Guide for Investors" Summary: In this insightful video, the presenter delves into the importance of understanding and analyzing a company's cash flow statement, offering valuable insights and practical tips for investors of all levels. Here are the key takeaways: 1. **Cash Flow Statement Overview**: The cash flow statement summarizes the inflow and outflow of cash within a company. It provides a clear picture of how a company manages its cash, a critical factor in determining a stock's value. 2. **Three Sections of the Cash Flow Statement**: The cash flow statement is divided into three sections: operating activities, investing activities, and financing activities. Each section reveals different aspects of a company's financial health. 3. **Operating Activities**: This section reflects the cash generated from a company's core business operations. It includes receipts from sales, interest and income tax payments, expenses, and more. Understanding this section is crucial for evaluating a company's ability to generate cash from its operations. 4. **Depreciation and Amortization**: Depreciation is an essential concept to grasp. It represents the reduction in the value of assets over time. Importantly, depreciation is a non-cash expense, so it's added back to net income when calculating cash flow from operations. 5. **Stock-Based Compensation**: Companies often compensate employees with stock. Stock-based compensation is another non-cash expense and is added back to net income in the cash flow calculation. 6. **Net Change in Operating Assets and Liabilities**: This line item reflects changes in working capital, which is the cash needed for day-to-day operations. Understanding working capital changes is especially important for growing companies. 7. **Cash Flow from Operations**: This is a critical metric, representing the cash a company generates from its core operations. It's a key factor in determining a company's financial success. 8. **Free Cash Flow**: Free cash flow is calculated by subtracting capital expenditures (capex) from cash flow from operations. It's an essential metric for investors, as it indicates how much cash a company can potentially return to shareholders. 9. **Free Cash Flow Yield**: This metric, calculated by dividing free cash flow by the market capitalization, provides an important percentage indicating the company's financial health and attractiveness as an investment. 10. **Capex as a Percentage of Sales**: This measure helps evaluate a company's capital intensity by dividing net capex by total revenue. It varies by industry, with certain industries being more asset-intensive than others. 11. **Investing Activities**: This section includes purchases and sales of investments, acquisitions, and disposals of businesses. It reflects how a company invests its cash in assets and opportunities. 12. **Financing Activities**: This section covers cash raised from investors or banks and cash paid to shareholders, including dividends and share repurchases. 13. **Share Repurchases**: Share repurchases can be powerful for shareholders, as they increase earnings per share. They can contribute to long-term shareholder value. 14. **Dividends**: Dividend payments are a crucial consideration for investors, and consistent dividend growth is often viewed positively. 15. **Total Payout Ratio**: Calculating the total amount spent on share repurchases and dividends as a percentage of free cash flow provides insights into a company's dividend sustainability. This comprehensive guide offers investors valuable insights into interpreting and analyzing a company's cash flow statement, enabling them to make informed investment decisions.

Absolutely phenomenal work! I have been struggling to internalize the cash flow statement for a while but your explanation is simple and concise. Thank you!

Love, when people are doing something with Excellence!

Wow, I have been struggling for some time on dissecting the important parts of the Cash Flow Statement. This video was phenomenal as it was concise, highlighted high level metrics, and had some cool analysis equations that I will be adding to my investor toolkit!

So simply yet effectively explained. Thank you!

Hi, thank you so much for such informative videos. It would be great if you could also make a separate video on depreciation. Keep up the great work!

Absolutely love this format and the way you explain these concepts. My education is in science and business/finance always seemed foreign to me. Now in my 30's looking to start understanding investing and this is sooo helpful. Definitely earned a like and subscribe from me!

I can listen this voice all day!!

Thank you Ic for teaching most boring thing in investing 😉

Phenomenal video! Usually I’m just a lurker with videos, not really engaging much at all. But this earned a like, subscribe, and comment from me. It’s nice to see not only detailed explanations of investment concepts but also real applications and examples. The value of this video is enormous, thank you for this.

Your voice makes the information easier to absorb.

Great video. I just started learning about financial statements and this has given me a great understanding of the cash flow statement. The statement can give great insight on an organization.

Thank you so much for this! I learnt so much!

Wonderfully clear explanation. Thank you.

Awesome explanation, cheers!

Extremely insightful and well detailed video. Great work👍

Omggg I finally found it!!! I saw the first two parts and couldn’t find this for ages

This is gold! Thank you for this video

My Thanks and Appreciation for simple example cash flow statement

Simple and easy and beautiful analysis Thank you

Excellent video. Thankyou!

Very helpful to learn the basics!

This is awesome! Would love more case studies of reading financial statements of real companies

The last calculation is really good

Who are you? I am so grateful for people like you! God Bless you.

Interesting video as always! Keep up the work 🚀

Thank you for this video!

I like your video presentation. It is informative too, at the same time. Thanks a lot for your guidance!

Thanks for the video. I like how you put real-world examples such as Warren Buffet and Coca- Cola. Makes the information easier to follow and more interesting.

Great explanation, thank you very much

Thank you for the informative content!

Now I remember why I dropped Accounting I do not have the head for this stuff. Great video!

Some of the items you highlighted in the video I couldn't find when I tried to analyze a company I want to invest into!

What an amazing video, thanks for sharing

Thank you for this informative video!

Love this video...thanks 👍

this video is gold. Thank you!

Wow! 🤯 Very impressive video! Thank you for such a decisive breakdown. Im saving this one. 😊

Amazing. Please keep doing this.

Thanks so much for this high value video!😭😭😭

what an awesome video, thank you. Subscribed.

Such a great video! Thank you!!

Thanks a lot! It was quite useful!

How to Read and Analyze a Cash Flow Statement like an Investment Analyst. I think it was a very well developed and debated topic, as an investment flow analyst must know how to carry out correct and accurate analyses.

very good, helpful. thank u

Great video....Thank you

Awesome video! Thank you very much.

it is full of knowledge and superb video.

Great video. Well done

🏦 🏦 🏦 🏦 🏦 🏦 🏦 🏦 🏦 🏦 🏦 🏦 🏦 ● 0:00 - 0:10 Intro • cash flow is important • how to "analyse" company's cash flow statement • the factors you should consider before investing ● 0:51 - 1:17 Why is the cash flow statement useful/important? • understand how a company's "operations" are "running" • where the company's money is coming from • understand how the company's money is being "spent" • tells you how much cash a business is "generating" • the amount of cash a business is able to generate over its lifetime is what determines that company's stock price. The more cash a stock is able to produce, the more that stock is going to be worth, all else being equal. ● 0:30 - 0:51, 1:17 - • summarises the amount of cash that "enters" and "exits" a company • positive number = cash entering • negative number = cash exiting • Statement is broken up into 3 distinct sections: "operating" activities, "investing" activities, and "financing" activities. • operating activities includes any "sources" and "uses" of cash from "business activities". It shows how much cash is "generated" from a company's products or services. • operating activities might include: receipts from sales of goods or services, interest payments, income tax payments, payments made to suppliers (for goods and services used in production), salaries and wages to employees, rent payments, and any other type of "operating expense" • 1:55 cash flows from investing activities includes any "sources" and "uses" of cash from a company's "investments" • includes purchases of PPE, investments in other companies, money spent on acquiring entire companies (acquisitions) • the "investment activies section" is almost always a negative number, especially for companies that are "growing" , because they are using the cash to "grow" the business through "investing" in things like new locations, new equipment to make more products, or even buying other companies. • 2:23 cash flow from Financing activities includes the "sources" of cash from investors and/or banks, as well as the "uses" of cash "paid" to shareholders. • includes payments of dividends, payments for stock repurchases, repayment of debt • changes in cash flows from financing activities are cash "in" when "capital" is "raised" and cash "out" when "dividends" are "paid" • so, if a company "issues" a "bond" to the "public", the company "receives" cash "financing", and that is reflected by a positive number on the cash flow statement. However, when the company "pays" back the money that it borrowed, that is reflected by a negative number on the cash flow statement. ● 3:35 - , 4:08 - • Going through cash flow statement line by line. • The important things an investor needs to watch out for. • first line is company's net income. Net income = how much company made in profit. • net income is "calculated" on a different financial statement called the income statement. • after starting with net income at the top of the cash flow statement, the end goal of the operating activities section is to be able to "calculate", commonly referred to as for short. In between, the net income and operating cash flow line, there's a few important items I'd like to draw your attention towards: • non cash expenses • Depreciation and amortization "line item". Usually for most companies, this is the largest number in this section of the cash flow statement. • Depreciation means that you "write off" the "value" of an "asset" over its "expected" "useful life". The "value" of almost any asset "depreciates" over time, and you can "write off" a certain amount as an "expense" "against" taxes every year. • So, for example, let's say Coca Cola buys a piece of "equipment" that "costs" $1000 that the company believes they will be able to use for 5 years - so its "useful life" is 5 years. This means that this specific piece of equipment depreciates at $200 every year. However, Coca Cola paid for the $1000 piece of equipment "in cash" "up front". So, the $200 annual depreciation expense is considered a "non cash expense", because "no additional cash" is "leaving" the business each year. • As a result, depreciation and amortization expense for the year needs ot be "added back" to "net income" when we are "calculating" "cash from operations" • 5:39 The next "line item" that is important to pay attention to is "stock-based compensation". This is when a company "pays" its employees in "stock" instead of "purely just" "cash". • So, for example, let's say you work at Facebook. Each year you may get $150 000 in "cash" and another $50 000 in "stock" of the company. This is a way companies encourage employees to stay employed in the company for longer, and is very common in the tech industry. Coca Cola isn't a technology company, so this number for them is relatively low. But this is a very important item to consider if you are analysing a tech company. • Just like depreciation, stock based compensation expense is considered a noncash expense. because no actual cash is "leaving" the business. So it also gets added back to net income to calculate "cash flow from operations" • Jumping down the cash flow statement a bit, another important item is the " ". This is also referred to as the company's "". Think of this as the cash needed to "run" the "short term" "operations" of the business. • Things such as "paying" "suppliers" and cash that a business is "owed" from its "customers", but "not yet paid". • Typically, for companies that are "growing", this is a negative number on the cash flow statement, because more "cash" is needed to "manage" the "day to day operations" of the business as it is "growing". However, for more mature companies like Coca Cola this number can vary from being a cash "inflow" ( a positive number ) and a cash "outflow" ( a negative number ), depending on the year. As we see with coca cola, this line was a "source" of cash in 2020 and 2019 but a "use" of cash in 2018. • 7:12 • Additionally, "cash flow from operations" is used to "calculate" a company's "free cash flow". • "Free cash flow" is the single most important metric in evaluating a business. This is because the "value" of any "investment" whether it is a "stock", "apartment building" or "small business", is determined by "the amount of cash flow" the business is able to "generate" over its "life". • In order to calculate FCF, we start with the "cash flow from operations" number. Then we "subtract out" what is referred to as "capital expenditures" or "capex". Capex is cash used by a company to acquire, upgrade, or maintain physical assets such as property, plants, buildings, technology, or equipment. Capex is often used to undertake new projects, or help the company grow, or even just "maintain" its operations. Making capital expenditures on "fixed assets" can include repairing a roof, purchasing a piece of equipment, or building a new factory. So, if Coca Cola were to increase the size of one of its factories Unfinished Thank you for this great video!

Excellent!

Very helpful video. For those looking to learn more about investing A Teenager’s Guide on how to Invest Like Warren Buffett and Charlie Munger is a great book.

Excellent

Great video.

Great Job! Thanks for the tutorial.

Really phenomenal video I've ever seen it's like a real investment course plss can u make video related to depreciation, amortization, and various valuation methods like DCF

So amazing

Great video

I... Download it 😉.. Thank you.. Dear sister💕

At 14:09 when she calculates the net of stock repurchases and issuance, the +/- signs are reversed from what they are on the KO cashflow statement. For 2020, the amount for Issuance of Stock on the KO statement is 647, but when she calculates the net value she shows this as "-647". Similarly for stock repurchase, the KO cashflow statement for 2020 shows (118) and she shows it as "118". This also occurs for the amounts in 2018 and 2019. I don't understand why she calculates it this way, particularly since she also uses this net amount later in calculating the metric of taking this amount for net stock issuance/repurchase and dividing it by free cash flow. BTW - I'm really enjoying learning from all 3 videos she has done on the different financial statements.

Hello, I have a question. In calculating the Free Cash Flow, were you substract Net Capex from CF from Operations, some Annual Reports already have a "Capital Expenditures" in the investing Activities of a Statement. Do we select that amount instead of Purchase of PP&E and disponsals or do we need to realize another equation?

Thanks, nice divulgative video, keep up!

Wow amazing content! Thank you so much

True . Nice video

First time, I have watched this your video and subscribed your channel. You've described cash flow statement in layman's terms.

Thanks!

Well, this will help

Great

Thank you 🙏

Hi, is DCF the only method that you use in calculating intrinsic value? Thanks in advance

Thank you.

Amazing video. Can you explain why some public companies don't show "net change in assets & liabilities " (working capital) on their cash flow statements? Ive seen some that don't? Thank you!

Thank

i rly wish you woulda been my accounting professor

Amazing content. Can you please do a video on DCF valuation. Thank you

Nice video! Don’t you use the maintenance capex for FCF calculations instead of just capex?

You said you can do 1 hour long video on depreciation! Please do! Thankyou for this video

Video on depreciation pls!

I like this channel. I am learning a lot everytime I watched a video. I wish your channel will grow more.

You’ll find all the statements and additional notes to financial statements, detailing other uses of revenue

Appreciate it.

Great video :) Question for you, if you don't mind. Up until now, two of the metrics I look at when valuating a business is 5 year average growth of Revenue and EBITDA. But I'm learning that it's better to look at FCF. However, I'm learning quickly that investments, share buy backs etc. can skew the average 5 year FCF growth if a company made a big investments or bought a lot of shares in 1 year. How can I most accurately determine a average 5 year growth rate for a company? For example. If we look at MED. It looks like they did well if you only look at their Revenue and EBITDA - it increased from 2020 to 2021. But if you look at their FCF it declined significantly. So it negatively skews the 5 year average FCF growth rate completely (when in reality, investments and share buy backs are good for a company).

Awesome content

Your presentation is good, as in easy to follow and seeming to make sense. I don’t have the background to disagree with anything you have put forth, but, using your methodology, how would Amazon looked as an investment a couple of years after going public?

Can you pls do a balance sheet one?! Just found your channel and love it after one video!

🔥🔥🔥

Excellent video, nicely laid out. The example you gave with Warren's stake in Coca-Cola growing as a result of share buy-backs is a bit confusing if we do not consider the shares issued over the years. Can an investors share holding grow over a period the company buys back shares?

just a question, for your model on total spent on repurchases according to the model there was more stock repurchase than stock issuance which is not what you said. I may be wrong, correct me if I am wrong

Is the Disposals of PP&E a cost of disposal or is it income, from a sale? Why is it positive?

5:09 : When/how would depreciation ever be a cash expense?

Hedge fund entity of share market. Cash flow statement converted as shares to sell? Whether share purchaser will be informed about technology they use to improve cash flow statement get integers under backpropagation algorithm?

you're doing God's work

Wow 75K subscribers and 57K views in 9 days, that is some great viewer engagement. Really impressed me

And where to get an information about options compensation? I know there are some resources with this insider data, but where to get it on SEC, from which files on the website and how to interpret?

Hello! I would love to know how to Analyse the "Stock based compensation expenses". If a company like facebook increase this number, is it a bad thing? - btw, very well explained!

Spot on.... K b cpa Hawaii