Cash Flow Statement

The Cash Flow Statement shows how the company is paying for its operations and future growth, by detailing the "flow" of cash between the company and the outside world; positive numbers represent cash flowing in, negative numbers represent cash flowing out.


Consolidated Financial Statements

Cash Flow Statement

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(dollar figures are in thousands) 1997 1996
Earnings $ 1,911 $ 1,374
Non-cash Adjustments:
    Depreciation 1,024 783
    Other Adjustments to Earnings 43 -16
Net Cash provided from Operations 2,978 2,141
Proceeds from Issuing New Stock 384 247
Payments to Repurchase Stock -396 -278
Stock Dividends Paid -10
Net Cash provided from Financing - 22 - 31
Additions to Property, Plant & Equipment -2,478 -1,987
Net Cash used for Investing -2,478 - 1,987
Change in cash and equivalents during year 478 123
Cash and Equivalents, beginning of year 2,260 2,137
Cash and Equivalents, end of year 2,738 2,260

Article Contents
Introduction / Diagram
Income Statement
Cash Flow Statement
Balance Sheet
Books & Links



The three sections of the cash flow statement - Operations, Financing, and Investing - correspond to the three solid green arrows back in the diagram.

The first two sections show the two ways the company can get cash. Operations means "making" money by selling goods and services; Financing means "raising" money by issuing stocks and bonds. The third section shows how the company is spending cash, Investing in its future growth. If you're interested in the stock of this company, you'd like to see that they can pay for the "investing" figure out of the "operations" figure, without having to turn to "financing". (Financing causes problems: issuing new stocks will lower the value of each individual share; issuing bonds commits them to making interest payments which will punish future earnings).

This company has a "healthy" cash flow: cash provided by operations is more than sufficient to cover cash used for investing. It's actually even better than that, because the "financing" number is negative: they're buying back stock shares in order to keep the value high.

By the way, note that the Operations section looks strange because the signs are all backwards; for example, depreciation is an expense, but you're adding it. What you're doing here is starting with "net" earnings from the income statement and then adjusting it by removing all components that don't entail a flow of actual money. Depreciation, which is a "paper" expense that's hidden within several of the expense categories on the income statement, has already been taken out of earnings; by adding it back in, you're removing its effect.


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