{"id":2583,"date":"2024-10-22T06:12:00","date_gmt":"2024-10-22T06:12:00","guid":{"rendered":"https:\/\/apex-aiexperts.com\/?p=2583"},"modified":"2024-10-22T06:12:00","modified_gmt":"2024-10-22T06:12:00","slug":"analysing-cash-flow-statements","status":"publish","type":"post","link":"https:\/\/apex-aiexperts.com\/es\/analysing-cash-flow-statements\/","title":{"rendered":"Analysing cash flow statements"},"content":{"rendered":"<p class=\"wp-block-paragraph\">In this lesson we\u2019ll take a look at another key area of the financial statements to consider in your fundamental analysis, the&nbsp;<strong>cash flow statement<\/strong>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This is a record of the cash generated and used by a company. Unlike the balance sheet, which is a snapshot of a particular point in time, the cash flow statement covers a certain period specified by the company.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You\u2019ll usually see data listed under the following categories:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Cash from operations<\/strong>The money generated by the company\u2019s normal business operations is shown here. Sometimes it may be further broken down into:\n<ol class=\"wp-block-list\">\n<li>Ganancias<\/li>\n\n\n\n<li>Additional to cash<\/li>\n\n\n\n<li>Subtractions to cash<\/li>\n<\/ol>\n<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">The figure is significant because it can indicate whether the company is able to make enough money to maintain and develop its operations, or if it has to rely on&nbsp;<strong>external financing<\/strong>.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Cash from investing<\/strong>This reports the company\u2019s sales or purchases of\u00a0<strong>long-term investments, property<\/strong>\u00a0y\u00a0<strong>equipment<\/strong>.<\/li>\n\n\n\n<li><strong>Cash from financing<\/strong>Here you\u2019ll see details of the company\u2019s\u00a0<strong>corporate bonds and shares<\/strong>\u00a0that have been issued or repurchased.\u00a0<strong>Dividend payments<\/strong>\u00a0to shareholders will also be listed.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">So what can we learn from these figures? Well, as the saying goes, \u2018<strong>cash is king\u2019<\/strong>. Many analysts feel that cash in the bank is an important asset, particularly because it\u2019s something that can\u2019t be faked by clever accounting.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The bottom line is that if a company is consistently generating more money than it\u2019s using, it will potentially be able to do a number of useful things with the surplus, such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Increase its dividend payments, benefiting shareholders<\/li>\n\n\n\n<li>Pay off existing debts, reducing its expenditure on interest payments<\/li>\n\n\n\n<li>Repurchase shares, which can have multiple benefits<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Did you know?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">A company might choose to&nbsp;<strong>repurchase shares<\/strong>&nbsp;for a variety of reasons:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Reducing the number of shares owned by private investors lowers the amount that must be paid out in dividends. The money saved can then be used to strengthen the business.<\/li>\n\n\n\n<li>If the company feels the market has undervalued its business, it might buy back the shares to take advantage of this \u2013\u00a0possibly reissuing them once the price has corrected<\/li>\n\n\n\n<li>Reducing the number of shares in circulation helps boost certain ratios that are commonly scrutinised by the markets, such as the earnings per share. The announcement of an upcoming buyback sometimes causes short-term investors to flock to the stock concerned, in the hope that the improved ratios will trigger a rise in the share price<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">You might want to compare&nbsp;<strong>cash from operations<\/strong>&nbsp;with&nbsp;<strong>net income<\/strong>&nbsp;(discussed in the next lesson). If the cash figure is higher, the company can be said to have&nbsp;<strong>high quality earnings<\/strong>. In other words, a substantial proportion of the earnings from the business is being turned into cash.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">On the other hand, if cash from operations is dwarfed by net income, you might compare the company to a friend who takes home a generous salary each month yet never seems to have the cash to buy a pint. Where is all that money going to, and why? Unless there\u2019s a valid reason for the difference, it may imply that the company is operating inefficiently.<\/p>","protected":false},"excerpt":{"rendered":"<p>In this lesson we\u2019ll take a look at another key area of the financial statements to consider in your fundamental analysis, the&nbsp;cash flow statement. This is a record of the cash generated and used by a company. Unlike the balance sheet, which is a snapshot of a particular point in time, the cash flow statement [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23,15],"tags":[],"class_list":["post-2583","post","type-post","status-publish","format-standard","hentry","category-fundamental-analysis","category-intermediate"],"_links":{"self":[{"href":"https:\/\/apex-aiexperts.com\/es\/wp-json\/wp\/v2\/posts\/2583","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/apex-aiexperts.com\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/apex-aiexperts.com\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/apex-aiexperts.com\/es\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/apex-aiexperts.com\/es\/wp-json\/wp\/v2\/comments?post=2583"}],"version-history":[{"count":1,"href":"https:\/\/apex-aiexperts.com\/es\/wp-json\/wp\/v2\/posts\/2583\/revisions"}],"predecessor-version":[{"id":2584,"href":"https:\/\/apex-aiexperts.com\/es\/wp-json\/wp\/v2\/posts\/2583\/revisions\/2584"}],"wp:attachment":[{"href":"https:\/\/apex-aiexperts.com\/es\/wp-json\/wp\/v2\/media?parent=2583"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/apex-aiexperts.com\/es\/wp-json\/wp\/v2\/categories?post=2583"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/apex-aiexperts.com\/es\/wp-json\/wp\/v2\/tags?post=2583"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}