Net cash outflows for financing.
So they don't have to borrow, they don't have to raise money to fund
their operations for their investments anymore.
Instead, their operations are able to fund all of their investing activities and
still throw off some cash that they can use to pay off debt or
repurchase equity or pay dividends.
So, just to get some more insight into this.
One thing that's often good to look at is comparing depreciation
to purchases of property, plant and equipment.
Again, it's very rough.
But if you view depreciation as using up your fixed assets,
capital expenditure is obviously, acquiring new ones.
It looks like 3M's at about replacement level.
So they are investing a lot in new PP&E, but
it's sort of replacing the things that they're using up.
They do have though, some active acquisitions.
So, about a billion of so in 2012 and
then there's a lot of activity with marketable securities.
So they bought about 5.5 billion of marketable securities,
but then they sold or had those almost all mature within 2012.
So, I think what happens is 3M is throwing off a lot of cash.
If they don't immediately have an acquisition in mind or
immediately have purchase of property, plant and equipment,
they plow it into marketable securities and investments.
And then when those opportunities to make an acquisition were by PP&E come,
they liquidate the marketable securities and use that to go out and
make their acquisitions.
So, it's almost like they're serving as their own bank by buying these marketable
securities.
Holding their cash, getting some return.
Waiting until they can invest it.
And then in the financing section,
we see a lot of the financing cash out flows purchase of treasury stock.
That's probably for stock options and
then there is a big dividend that they pay to shareholders,
which again is another example oftentimes of a mature company that if you don't have
a full set of investments that you can put all your cash back in to, you may as well
just pay it back to your shareholders and let them reinvest it somewhere.
I think you're ready to do these kinds of life cycle or growth analyses on your own.
So, here's what I want you to do.
After the video's over, go on the internet.
Find a firm that you're interested in.
Take a look at their cash flow statement and see what you can learn by looking at
the company's operating investing, and financing cash flows.