Professional Documents
Culture Documents
($ in Thousands)
Tax Rate:
40.0%
Income Statement:
Revenue:
Cost of Goods Sold (COGS):
Gross Profit:
Gross Margin %:
Balance Sheet:
$
Operating Expenses:
Sales & Marketing:
Research & Development:
General & Administrative:
Total Operating Expenses:
165
75
50
290
Depreciation:
Amortization of Intangible Assets:
Stock-Based Compensation:
10
10
20
300
42.9%
20
(20)
(50)
(10)
(15)
225
Income Taxes:
Current Portion:
Deferred Portion:
Net Income (Profit After Taxes):
Net Income Margin:
700
70
630
90.0%
90
40
50
$
135
19.3%
Assets:
Current Assets:
Cash:
Short-Term Investments:
Accounts Receivable:
Inventory:
Prepaid Expenses:
Total Current Assets:
Long-Term Assets:
Property, Plant & Equipment:
Goodwill:
Other Intangible Assets:
Long-Term Investments:
Total Long-Term Assets:
Total Assets:
Liabilities & Equity:
Current Liabilities:
Revolver (Short-Term Debt):
Accounts Payable:
Accrued Expenses:
Deferred Revenue:
Total Current Liabilities:
Long-Term Liabilities:
Debt:
Deferred Tax Liability:
Total Long-Term Liabilities:
Equity:
Common Stock & Additional Pa
Retained Earnings:
Treasury Stock:
Accumulated Other Comprehen
Total Equity:
Total Liabilities & Equity:
BALANCE CHECK:
4. Why do you exclude certain items, such as investing and financing activities, from the FCF c
5. How do you use and interpret FCF when analyzing and valuing companies?
6. FCF Comparison and Interpretation for Wal-Mart, Amazon, and Salesforce.
7. Recap and Summary.
Start of
Period
End of
Period
nt Assets:
$
ort-Term Investments:
counts Receivable:
paid Expenses:
Current Assets:
Term Assets:
perty, Plant & Equipment:
s & Equity:
nt Liabilities:
volver (Short-Term Debt):
counts Payable:
crued Expenses:
ferred Revenue:
Current Liabilities:
300
300
660
50
30
30
770
100
50
150
30
50
40
100
220
450 $
990
50
15
10
15
90
Term Liabilities:
-
240
50
290
50
400
450 $
170
485
(50)
5
610
450 $
990
NCE CHECK:
OK!
OK!
Free Cash Flow:
do with it?
ny's operations?
ompanies?
nd Salesforce.
low Statement:
reciation:
ortization of Intangible Assets:
ck-Based Compensation:
dwill Impairment:
E Write-Down:
erred Income Taxes:
ns) / Losses on Investment Sales:
e in Operating Assets & Liabilities:
nge in Accounts Receivable:
nge in Inventory:
nge in Prepaid Expenses:
nge in Accounts Payable:
nge in Accrued Expenses:
nge in Deferred Revenue:
Cash Flow from Operations:
$
135
10
10
20
50
10
50
15
(50)
(30)
(30)
15
10
15
230
(50)
(100)
(100)
85
(165)
t Principal Repayment:
olver Issued / (Repaid):
ity Issuance:
dends Issued:
re Repurchases:
Cash Flow from Financing:
e Effects:
ange in Cash:
300
(60)
50
100
(50)
(50)
290
5
360
300
g Cash Balance:
ash Flow:
660
180
What Does Free Cash Flow Mean? Wal-Mart vs. Amazon vs. Salesforce
($ in Million Except Per Share Data)
Wal-Mart - FCF Excerpt from Financial Statements:
Free Cash Flow Calculation:
Cash Flow from Operations:
Less: Capital Expenditures:
Free Cash Flow:
$
$
23,643 $
(12,699)
10,944 $
421,395
16,993
Year 1
24,255 $
(13,510)
10,745 $
Year 2
25,591
(12,898)
12,693
Year 1
(796) $
(3,727)
2,687
(935)
994
(1,777)
Year 2
(614)
(2,759)
1,061
271
981
(1,060)
446,509
16,387
468,651
17,756
(0.4%)
(10.8%)
(0.2%)
(6.0%)
(1.8%)
55.7%
3.0%
18.1%
50.4%
2.8%
6.0%
(3.6%)
2.6%
5.0%
8.4%
5.5%
Interpretation: FCF seems to be all over the place - falling, rising, falling again Cash Flow from
was MOSTLY growing except for the decline in Year 3 - due to Accrued Taxes.
Revenue is certainly growing over time, but WC and CapEx impact FCF in a huge, unpredictable w
Not exactly "playing games" with Working Capital, but it did change something significantly in
Year 2, which pushed down its overall requirements even as revenue increased.
So, bottom-line: not the worst we've seen, but it's hard to buy into organic sales growth alone
contributing to the growth in Free Cash Flow. Some contribution, but some of it was also due
to CapEx and Working Capital changes.
And even worse is when "games" and accounting gimmicks are affecting FCF and distorting the p
We'll see many examples of how to calculate and project this in the upcoming modules.
$
$
Year 3
23,257
(13,115)
10,142
Year 3
(566)
(1,667)
531
103
(1,224)
(2,823)
476,294
16,695
Annual Revenue:
Annual Net Income:
3,495 $
(979)
2,516 $
34,204
1,152
Year 1
3,903
(1,811)
2,092
Year 1
(866)
(1,777)
2,997
1,067
43
1,464
48,077
631
(0.6%)
(16.9%)
3.0%
232.0%
(20.1%)
56.4%
2.8%
(16.9%)
46.4%
3.8%
40.6%
(45.2%)
11.7%
1.6%
(6.0%)
(9.1%)
Interpretation: CapEx jumping around so much that it's hard to say anything s
Free Cash Flow here - huge ramp-up in spending in the past 2 years.
Revenue is growing at a good clip, and that is genuinely contributing to FCF grow
Cash Flow from Operations is also increasing - but Amazon is clearly also investin
into future growth, and we don't know what the payoff of that will be.
ng significantly in
Good investment / strategy / company? Depends on how useful you think that C
is perhaps?
Not really "playing games" with Working Capital, but it is interesting how much t
have changed over time - the Accounts Payable changes really stand out, but th
reduces cash flow for Amazon.
he company have
nvest in other
ancial statement
se it might do
revenue growth?
g modules.
$
$
Year 2
4,180 $
(3,785)
395 $
Year 3
5,475
(3,444)
2,031
Year 2
(861) $
(999)
2,070
1,038
275
1,523
Year 3
(846)
(1,410)
1,888
736
399
767
61,093 $
(39)
74,452
274
Annual Revenue:
Annual Net Income:
$
$
2.5%
(3905.1%)
1.0%
279.9%
(81.1%)
90.6%
6.2%
414.2%
62.9%
4.6%
27.1%
(106.2%)
7.1%
21.9%
(802.6%)
31.0%
459
(91)
368
1,657
70
And what are its future CapEx plans? Seems to a bit all over t
the numbers here.
Statements:
Year 1
$
$
Year 2
Year 3
592 $
(152)
440 $
737 $
(176)
561 $
875
(299)
576
Year 1
(245) $
(167)
(8)
80
445
105
Year 2
(183) $
(233)
(10)
193
479
247
Year 3
(425)
(265)
105
(29)
612
(1)
2,267 $
(12)
3,050 $
(270)
4,071
(232)
4.6%
(907.5%)
8.1%
(91.4%)
(0.0%)
0.5%
19.5%
25.6%
6.7%
27.6%
23.8%
5.8%
2.7%
34.2%
7.3%
36.8%
(116.6%)
28.8%
34.6%
2237.1%
24.6%
33.5%
(14.2%)
18.8%
ems to a bit all over the place right now, which is impacting