We recommend reading this chapter on Varsity to learn more and understand the concepts in-depth.
Key takeaways from this chapter
- The Cash flow statement gives us a picture of the company’s actual cash position.
- A legitimate company has three main activities: operating, investing, and financing.
- Each activity either generates or drains money for the company.
- The company’s net cash flow is the sum of operating activities, investing activities, and financing activities.
- Investors should specifically look at the cash flow from the company’s operating activities.
- When the liabilities increase, the cash level increases and vice versa
- When the assets increase, the cash level decreases and vice versa.
- The net cash flow number for the year is also reflected in the balance sheet.
- The Statement of Cash flow is a valuable addition to a company’s financial statements because it indicates its performance.
Thanks for posting this video. Can you pls. tell – where to find the cash flow statement for particular company like Bajaj-auto? I could not find the table mentioned in your video on their website. Pls. give more info on that. Moreover, apart from those 3 rows like operating, investing and financing, I am seeing many other data on any company cash flow statement on ET. So, pls. go through any in details.
Ashish, you will have to download the annual report of the company and look for the cash flow statement.
Can you please tell me how to calculate free cash flow?
YOu can keep a track here – https://zerodha.com/varsity/chapter/fcff-fcfe/
Hello Sir, I would like to know from where can i get cash flow statement for last ten years.
Please do check the annual report of the company. Alternatively, you can 3rd party websites like Tijori or Screener.
Historical annual report, Priya.
Thanks for the response
Sure, good luck and happy learning 🙂
1.Sir in operating cash flow it show total amount recive from operation .
These amount is with revnue or just profit of revenue.
2. Where to see repaymet of repayment of a company.
It is PAT and not revenue. Repayment details are in the finance activity.
Sir sorry but still i not understand the corelated effect cash flow has on p&l and balance sheet.
Can you have any simple way or logic to understand these.
The numbers flow from one statement to another, Niraj; hence they are all interconnected. Not sure if I can put this across in a different way.
Ok thanks sir.l try to figure these out.
Sure, good luck!
Ok thanks sir. Now try to manage these out.
Hello sir I want to ask what can I do to become a successful professional investor.
Learning and Practice no substitute to that.
In cash flow statement of x company, in found negative receivable, payable and inventory. What does it signify?
It means the company’s receivables from previous year to this year has reduced.
Sir,
In the pdf document (Ref page no: 27), in P&L statement , the revenue considers operating as well as revenue from other non-operating sources too. However, while calculating the cash flow from operating activities (Refer page no: 73), why the PBT figure is taken, as this figure includes contribution from operating and other non-operating activities too.
Can you please help understand?
It depends on you as an analyst. I’d generally prefer to exclude the non-operating sources to understand the company’s true operating efficiency and margins. I’ll look into the PDF to make it consistent.
HI Kartik,
Thank you for sharing the knowledge. I can not thank you enough.
I have one question though, If there is surplus cash from operating activity, and negative cash flow from financing activity, How did you figure that company is paying divident vs paying for debt?
You can always cross-check the balance sheet to see if there is debt. If there is no debt, then it implies a dividend payout.
Can someone please explain the 6th and 7th point in Key Takeaway with example
Think of any liability. Example, taking a bank loan…when you take a bank loan, cash comes into the account, hence cash balance increases. Assets on the other hand consume cash..for example if the company buys an asset, it has to pay cash, which means there is a cash outflow.
Oh sure got it. Thank you. Your teaching is very good.
Happy learning, Akila 🙂
how is operating surplus and dividend are connected?
The operating surplus goes into the reserves and from there the dividends are paid out. Higher the surplus, higher the probability of dividends.
Karthik sir could you please remove the end banner it ll be really helpful to note key takeaway
We fixed that in the subsequent videos, Athul.
Karthik sir I have gained good skill in trading.But now I dont have capital to trade.Are there any ways to raise capital?,I am ready share about experience and skill to get through banknifty options.
Ah no, Goutham. There are no such avenues, unfortunately.
Sir,I want to speak to you in whatsapp to share some of my thoughts and plan to trade options.Can you please…..
give me 5 minutes of your valuable time?If ok,please send “Hi” to this no.
sir 7680867104.
Goutham,sorry, I wont be able to do that (company policy). Please do share your queries here itself.
sir,my doubt is since we are investing for long term, is it enough to check the annual report of only one year?
or till which year will give a clear idea?
Yes, that should do. But evaluating the business once in 6 months is good too, just in case there is any change in business 🙂
sir how to see that the operating,investing,finacial activites are wheather positive or negative can you explain me about it??
PLease check the cashflow statement of the compnay for this, Vinoth.
How does the operating activity generates cash
Thats the core objective of any business, Ritik.
If the cash flow is negative is there bad for company growth
Not really, you need to figure out why its negative.