Cash Flow Statement - Part 3

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From the course by Emory University

Finance for Non-Financial Managers

68 ratings

Emory University

Finance for Non-Financial Managers

68 ratings

Finance is for “Non-financial Managers” who want to understand key financial principles and apply them in a real-world context. Over the course of the program window, you will work your way through a series of nine modules that move from understanding basic financial principles to applying financial analysis and ratios to drive decisions. In addition, each module is capped with an ending self-evaluation to ensure that you have absorbed the following key learning objectives: + Understand the language associated with finance + Know how and when to use financial terms and analysis techniques + Read and assess company performance using financial statements + Recognize the link between organizational strategy and financial objectives + Use "the numbers" to your best advantage to make more informed decisions

From the lesson

Financial Statement Basics

This module will provide an overview of Financial Statements.

Cash Flow Statement - Part 16:03

Cash Flow Statement - Part 22:23

Cash Flow Statement - Part 34:02

Cash Flow Statement - Part 42:19

Meet the Instructors

Thomas Smith
Assistant Professor in the Practice of Finance
Goizueta Business School

Lastly, the bottom part of our cash flow statement

has net cash from financing activities.

So in this portion, you'll notice it says you have

issued some debt, issuance of debt, right here.

Well, when I take on a new loan, what I'm doing is I'm going to the bank and

saying I would like $3 billion.

And I'm willing to pay you some interest.

As far as the cash flow is concerned, this is $3 billion that's

flowing into my organization, it's more cash that I have.

Yes, I have long-term obligations in terms of my debt, but

this is positive cash flow, right?

I issue stock.

So when I issue stock what happens is I'm selling part of

my company to somebody else.

In exchange for ownership, they give me money, that's a positive cash flow.

Here, for Dell, they've repaid some debt.

When you repay debt, you're taking cash in your pocket and

you're giving it back to the bank.

That's a negative cash flow.

Repurchasing capital stock.

I go into the universe and say,

I want to buy back some of the ownership of my company.

So here it is, I take my cash and I buy the stock.

That's a negative cash flow.

So what happens is I have cash flow from financing activities.

So at the end of the day, now I've got net changes in cash and equivalencies.

So I've got positive cash flow from operating activities.

I've got a negative cash flow from investing activities.

I have a positive cash flow from financing activities.

And so the sum of my cash flow from operating, and

my cash flow from investing, and my cash flow from financing

equals my net change in cash and cash equivalencies.

What you'll notice on Dell, if you do the calculations,

is we have a positive net cash from operating activities of 3,969.

And we have a negative cash flow from investing activities of 1,165 and

we have a positive cash flow from financing of 477.

And so, if you do these calculations, you'll get a net change in cash and

cash equivalencies of 3,000,281.

However, if you look at your cash flow statement, you'll notice that the net

change in cash and cash equivalencies for Dell is actually slightly different.

It's different by that $3 million there.

The effect of exchange rate changes.

When Dell, or any other company has to by stuff from the European Union or

from China, the differences in the foreign exchange market and

what your dollar can buy, change over the course of the year.

It's at the very, very end,

you have to do this little calculation to capture any of those changes.

And so if you take the cash flow from operating, and

the cash flow from investing, and the cash flow from financing,

you'll get your net change and cash and cash equivalencies,

plus or minus a little bit from your foreign exchange rate changes.

Why don't you try those calculations now.

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