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Analyzing Cash Flow Statement
Business Life Cycle
Start Up
Growth
Maturit y
Decline
Cash Flows in the Start-Up Phase PROFITABILITY
CFO
CFI
CFF
Negligible Sales
Negative
Highly Negative
Highly Positive
Highly Negative
Higher Credit to Customers
Capacity Building and Expansion
Higher Discounts
High Funding Needed for Operations and Expansion
No Proceeds from Sale of Assets
Higher Inventory Buildup High Costs due to inefficiencies and low scale
Lesser Credit from Suppliers
Lesser Debt & More Equity
No Dividends and Interest
Cash Flows in the Growth Phase PROFITABILITY
CFO
CFI
CFF
Sales Picking Up
Less Negative/ Positive
Negative
Positive
Continuous Expansion and Capacity Buildup
Debt Funding now available
Positive
Discounts Stabilizing Higher Inventory Buildup & Credit to Customers Some Credit from Suppliers
Some Tax Expense as Book Profits are
Cost reduction due to scale and
Interest Cost No Dividend as funds are reinvested
Cash Flows in the Maturity Phase PROFITABILITY
CFO
CFI
CFF
Positive
Highly Positive
Slightly Negative
Negative
High Cost Efficiency due to scale
No additional avenue for Investment
Repayment of Loans
Sales High & Stabilized
Stability in Working Capital Assets like Receivables and Inventory
Inflation Adjusted Investment in Assets
Higher Dividends Reducing/ Stabilizing Interest Buy Back of Shares
High Tax Outflows High Credit from Suppliers
Cash Flows in the Decline Phase PROFITABILITY
CFO
CFI
CFF
Low & Declining
Slightly Positive & Declining
Positive
Negative
Sale of Redundant Capacity and Assets
Repayment of Loans
Sales Saturated & Declining
Working Capital Assets Reducing High Tax Outflows as Capital Investments go down and Assets are sold Cost inefficiencies due to reducing scale
Higher Dividends Concentration of Manufacturing Facilities may improve margins
Reducing Interest Buy Back of Shares
Cash Flows before exit from Business PROFITABILITY
CFO
CFI
CFF
Negative
Most likely to be negative
Positive
Negative
Net sale of assets
Repayment of Loans
Even if positive, mainly because of Depreciation, Reduction in Working Capital Assets
False Capitalization of Expenses
Almost no dividend Capital funding drying up
Cash Flows and Profits - Interglobe Aviations Ltd. 3000
2000
1000
0 Oct-06
Feb-08
Jul-09
Nov-10
Apr-12
Aug-13
Dec-14
-1000
-2000
-3000
-4000
Cash From Operations Cash from Financing Activities
Cash From Investment Activities Profits Before Taxes
May-16
How is Apple doing? 80000
60000
40000
20000
0 2010 -20000
-40000
-60000
Cash from Operations Cash from Investment Activities Cash from Financing Activities 2011
2012
2013
2014
Amazon: Guzzling the market share 8000
6000
4000
2000
0 2010 -2000
-4000
-6000
Cash from Operations Cash from Investment Activities Cash from Financing Activities 2011
2012
2013
2014
A Dying Company: Aeropostale Inc. 300
200
100
0 2010 -100
-200
-300
2011
2012
2013
2014
Cash from Operations Cash from Investment Activities Cash from Financing Activities
KPR Mills - Sales Net Sales 2500
2000
1500
1000
500
0 2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
KPR Mills – Profits Before Taxes Profit Before Taxes - KPR Mills 200.00
150.00
100.00
50.00
0.00 38047 -50.00
38412
39873
40969
38777
40238
39142
39508
40603
41334
41699
KPR Mills - CFO CFO 400.00 350.00 300.00 250.00 200.00
CFO
150.00 100.00 50.00 0.00 38047 -50.00 -100.00
38412
39873
40969
38777
40238
39142
39508
40603
41334
41699
KPR Mills - CFI CFI 0.00 38047
38412
39873
40969
38777
40238
39142
39508
40603
41334
41699
-50.00 -100.00 -150.00 -200.00 -250.00 -300.00 -350.00 -400.00 -450.00
CFI
KPR Mills - CFF CFF 400.00 300.00 200.00 100.00 0.00 38047 -100.00 -200.00 -300.00
CFF
38412
39873
40969
38777
40238
39142
39508
40603
41334
41699
KPR Mills – Inventory Levels Inventories 300 250 200 150 100 50 0 2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
KPR Mills – Trade Receivables Trade Receivables 250
200
150
100
50
0 2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
KPR Mills – Dividends Dividends 0 38047
38412
39873
40969
38777
40238
39142
39508
40603
41334
41699
-5 -10 -15 -20 -25 -30 -35
Dividends
KPR Mills – Stock Performance KPR Mills Stock Performance 1400 1200 1000 800 600 400 200 0
Business Life Cycle
Start Up
Growth
Maturit y
Decline
Cash Flows in the Start-Up Phase PROFITABILITY
CFO
CFI
CFF
Negligible Sales
Negative
Highly Negative
Highly Positive
Highly Negative
Higher Credit to Customers
Capacity Building and Expansion
Higher Discounts
High Funding Needed for Operations and Expansion
No Proceeds from Sale of Assets
Higher Inventory Buildup High Costs due to inefficiencies and low scale
Lesser Credit from Suppliers
Lesser Debt & More Equity
No Dividends and Interest
Cash Flows in the Growth Phase PROFITABILITY
CFO
CFI
CFF
Sales Picking Up
Less Negative/ Positive
Negative
Positive
Continuous Expansion and Capacity Buildup
Debt Funding now available
Positive
Discounts Stabilizing Higher Inventory Buildup & Credit to Customers Some Credit from Suppliers
Some Tax Expense as Book Profits are
Cost reduction due to scale and
Interest Cost No Dividend as funds are reinvested
Cash Flows in the Maturity Phase PROFITABILITY
CFO
CFI
CFF
Positive
Highly Positive
Slightly Negative
Negative
High Cost Efficiency due to scale
No additional avenue for Investment
Repayment of Loans
Sales High & Stabilized
Stability in Working Capital Assets like Receivables and Inventory
Inflation Adjusted Investment in Assets
Higher Dividends Reducing/ Stabilizing Interest Buy Back of Shares
High Tax Outflows High Credit from Suppliers
Cash Flows in the Decline Phase PROFITABILITY
CFO
CFI
CFF
Low & Declining
Slightly Positive & Declining
Positive
Negative
Sale of Redundant Capacity and Assets
Repayment of Loans
Sales Saturated & Declining
Working Capital Assets Reducing High Tax Outflows as Capital Investments go down and Assets are sold Cost inefficiencies due to reducing scale
Higher Dividends Concentration of Manufacturing Facilities may improve margins
Reducing Interest Buy Back of Shares
Cash Flows before exit from Business PROFITABILITY
CFO
CFI
CFF
Negative
Most likely to be negative
Positive
Negative
Net sale of assets
Repayment of Loans
Even if positive, mainly because of Depreciation, Reduction in Working Capital Assets
False Capitalization of Expenses
Almost no dividend Capital funding drying up
Cash Flows and Profits - Interglobe Aviations Ltd. 3000
2000
1000
0 Oct-06
Feb-08
Jul-09
Nov-10
Apr-12
Aug-13
Dec-14
-1000
-2000
-3000
-4000
Cash From Operations Cash from Financing Activities
Cash From Investment Activities Profits Before Taxes
May-16
How is Apple doing? 80000
60000
40000
20000
0 2010 -20000
-40000
-60000
Cash from Operations Cash from Investment Activities Cash from Financing Activities 2011
2012
2013
2014
Amazon: Guzzling the market share 8000
6000
4000
2000
0 2010 -2000
-4000
-6000
Cash from Operations Cash from Investment Activities Cash from Financing Activities 2011
2012
2013
2014
A Dying Company: Aeropostale Inc. 300
200
100
0 2010 -100
-200
-300
2011
2012
2013
2014
Cash from Operations Cash from Investment Activities Cash from Financing Activities
KPR Mills - Sales Net Sales 2500
2000
1500
1000
500
0 2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
KPR Mills – Profits Before Taxes Profit Before Taxes - KPR Mills 200.00
150.00
100.00
50.00
0.00 38047 -50.00
38412
39873
40969
38777
40238
39142
39508
40603
41334
41699
KPR Mills - CFO CFO 400.00 350.00 300.00 250.00 200.00
CFO
150.00 100.00 50.00 0.00 38047 -50.00 -100.00
38412
39873
40969
38777
40238
39142
39508
40603
41334
41699
KPR Mills - CFI CFI 0.00 38047
38412
39873
40969
38777
40238
39142
39508
40603
41334
41699
-50.00 -100.00 -150.00 -200.00 -250.00 -300.00 -350.00 -400.00 -450.00
CFI
KPR Mills - CFF CFF 400.00 300.00 200.00 100.00 0.00 38047 -100.00 -200.00 -300.00
CFF
38412
39873
40969
38777
40238
39142
39508
40603
41334
41699
KPR Mills – Inventory Levels Inventories 300 250 200 150 100 50 0 2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
KPR Mills – Trade Receivables Trade Receivables 250
200
150
100
50
0 2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
KPR Mills – Dividends Dividends 0 38047
38412
39873
40969
38777
40238
39142
39508
40603
41334
41699
-5 -10 -15 -20 -25 -30 -35
Dividends
KPR Mills – Stock Performance KPR Mills Stock Performance 1400 1200 1000 800 600 400 200 0
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