The Cash Flow Statement is the best document to determine if you have "Vigilant Leaders." What I mean is this document tells you how management is using the money from Operating Activities, or what they are doing in the absence thereof. Once I get past my criteria for P/E and Price/Book, this is the first place I will look to determine if management is good, or if they suck. That is a quick discriminator for me, and it tells me if a seemingly bad company is on a path to redemption with better management practices.
7:53 "Investing in inventory" does not appear in the financing section of the CFS. Fluctuations in ending inventory are included in the Changes in Working Capital line in the Operating Section of the CFS. Clearly the negative investing cash flows are a result of PP&E expenditures.
Excellent education! One small observation. The Sears Holding Company example in the video shows updated, restarted and reclassified statements, all for the month of March 2012 so we can not conclude a multi year analysis/trend.
A lot of investors mistakenly concentrate heavily on the company's Profits & Loss Statements to determine if the company is "successful" but the Cash Flow Statements give a better picture of what the company really has on hand and what it is doing with its money. There is an excellent video by MoneyWeek that shows an example of how different a company can look between what the bottom line of their P&L statement looks like and the bottom line of their CF statement looks like. In the example comparison the company looks like it's making 69 million on the P&L statement, but they have a NEGATIVE 10 million in cash flow on the the CF statement. Both figures are accurate and true for the company, but they evaluate 2 different aspects of how a company can be evaluated. the video is titled "What is a Cash Flow statement?" and the link is here: th-cam.com/video/GkGdlgX3xYI/w-d-xo.html
Really great videos so far Preston! Loving all the info. Just FYI- number #27 (this one) is out of order on the intermediate playlist. It comes after 25 but before 26!
Thanks for pointing that out! I'm glad I read through the comments, it helped me out cause I was confused, I was like, "wait, there's something missing..."
Hi Preston, I am learning a lot while watching through your videos and can't thank you enough. The video previous to this(Lesson 26 / Video 15 in the playlist) appears to be deleted. Could you re-up it pls. or let us know what we are missing. Thanks in Advance.
Preston: In INTC income statement in the video, one data point suggested large buy-back of shares by the company. However, same year, the statement suggested large issuance of bond. Is this an indication of debt being cheaper source of capital at that moment (while maintaining other things like balancing debt and equity proportions).
Hi Preston. Great videos although it seems i’m a little late to this party. Do you have any videos using msn money as it now exists as it looks their website layout has very much changed since these courses were published. Thank you in advance.
IS cash from operating activities similar to free cash flow? yahoo finance doesn't show cash flow from operating activities but has a free cash flow section
first i will say thanks for the video i just now exposed. second i have a question: in minute 11:00 you say kodak sell assets..where i can find this info? thanks in advance
Hello Mr. Preston, loved ur lessons. I would like to know about “How to read Income Statements and Balance Sheets” when u will upload a video on that?? kindly let me know.. Thank you...
Preston one day when i get decently well off from stocks.. i will make a sizable donation to your company Inshallah(if god wills). Man you did a great work with these videos.
Check the investors section of the company's website (if it is publicly traded) and look for its quarterly/annual financial statements and/or its annual SEC 10-K report. The timing and amount of stock dividend payouts are typically detailed in the statement notes where the company explains their plans for the upcoming year/quarter. You can also obtain a company's annual 10-K report from the Federal SEC website.
Maybe yhey are acquiring debt. It is bad, I think, if debt ratios are over 50, if they are over 100% it is too much risk, maybe in both cases they have liquid ratios below 1
Not really. The perception is quite wrong here. The operating income is the the 'actual profit' from which they spend all these. The net change is just the extra cash from the profits they make, which they haven't used for investing or paying back the debts, or anything at all. Its just the profit they've left untouched.
TheKOng2000 I'd recommend "the intelligent investor" by Benjamin Graham to get you started. Then once you've read that get your teeth into "Financial Shenanigans" by Howard M Schilit and Jeremy Perler.
you said that if a company buys back it's shares, it's a good thing for the shareholders, because their shares are more valuable. Is that right? I thought that a company can simply release let's say 20% of their bussiness as shares. If they buy back 10%, they will own 90%, but it should have absolutely no affect on value of the remaining shares. If it is not correct, any company could just release millions of shares making your shares worthless due to inflation and make itself the owner of 99.99% of the business for free.
a company like coca cola reducing the number of shares would increase the damand for the shares, and would increase the market cap. for example: frist 10 customers get 80% discount, youre going to get a bigger crowd trying to get a cheap whatever.
Lets have a generic example: [Before the company buying back the shares] Lets say the market cap of a company is 30 USD And they have 10 shareholders. The value of each share is 30/10 --> 3 USD Lets say they bought back two shares. Value of each share now becomes --> 30/8 ~~ 3.75 USD > 3 USD. Throw in more variables like the Cost of buying back the shares, The end value of share would be lesser. But at large scale, the end value would anyways be greater than the value before buying back the shares.
When a company buys back it's common stock, it reduces the outstanding shares and temporarily boosts (EPS) earnings per share. Private Equity companies operate differently ! Reinvest the earnings into more real estate deals/ capital expenditures!
Preston, 26 and 27 are out of order on the playlist. Great work btw. I haven't found anyone better.
The Cash Flow Statement is the best document to determine if you have "Vigilant Leaders." What I mean is this document tells you how management is using the money from Operating Activities, or what they are doing in the absence thereof. Once I get past my criteria for P/E and Price/Book, this is the first place I will look to determine if management is good, or if they suck. That is a quick discriminator for me, and it tells me if a seemingly bad company is on a path to redemption with better management practices.
7:53
"Investing in inventory" does not appear in the financing section of the CFS. Fluctuations in ending inventory are included in the Changes in Working Capital line in the Operating Section of the CFS. Clearly the negative investing cash flows are a result of PP&E expenditures.
Very well explained. Probably the best video I have seen on this topic.
Your videos helped me begin my investing career in the stock markets.
sears bankrupted now. lol. you saw it coming.
Excellent education! One small observation. The Sears Holding Company example in the video shows updated, restarted and reclassified statements, all for the month of March 2012 so we can not conclude a multi year analysis/trend.
Yes, he didn't realize it.
its crazy because looking back now; companies like Sears should've been easy to spot after reading the cash flow.
A lot of investors mistakenly concentrate heavily on the company's Profits & Loss Statements to determine if the company is "successful" but the Cash Flow Statements give a better picture of what the company really has on hand and what it is doing with its money. There is an excellent video by MoneyWeek that shows an example of how different a company can look between what the bottom line of their P&L statement looks like and the bottom line of their CF statement looks like. In the example comparison the company looks like it's making 69 million on the P&L statement, but they have a NEGATIVE 10 million in cash flow on the the CF statement. Both figures are accurate and true for the company, but they evaluate 2 different aspects of how a company can be evaluated. the video is titled "What is a Cash Flow statement?" and the link is here: th-cam.com/video/GkGdlgX3xYI/w-d-xo.html
6 years later Sears goes out of business
And Kodak hit $60 a share
Really great videos so far Preston! Loving all the info.
Just FYI- number #27 (this one) is out of order on the intermediate playlist. It comes after 25 but before 26!
Thanks for pointing that out! I'm glad I read through the comments, it helped me out cause I was confused, I was like, "wait, there's something missing..."
that evil laugh before pulling up the kodak staement lolol @ 10:17
Hi Preston, I am learning a lot while watching through your videos and can't thank you enough. The video previous to this(Lesson 26 / Video 15 in the playlist) appears to be deleted. Could you re-up it pls. or let us know what we are missing. Thanks in Advance.
Thank you for this. I'm getting more and more comfortable with the subject of Cash Flow.
All your lectures are awesomeeeeee!!!!!!!!!!!!!! Thanks so much for making them for us!!!!!!!!!!!!!!!!
This is a great lesson. Cash flow statement has been such a mystery to me, but now all this makes great sense. Do you have a lesson on Free Cash Flow?
2017...
WMT is up about 50% (if dividends are invested - compound interest)
SHLD is down 87%, no dividends were paid.
Back when WMT stock was 68 bucks, thanks for the great vid still helps today!
Thanks again ... explained in very lucid way for people to understand
thank you so much for everything you are doing for the investor community
Preston: In INTC income statement in the video, one data point suggested large buy-back of shares by the company. However, same year, the statement suggested large issuance of bond. Is this an indication of debt being cheaper source of capital at that moment (while maintaining other things like balancing debt and equity proportions).
Hello, Msn doesn’t seem to be showing 10 year summary anymore. Is that correct?
Another great video Preston, just wondering if it cut short? Cheers,
Hi Preston. Great videos although it seems i’m a little late to this party. Do you have any videos using msn money as it now exists as it looks their website layout has very much changed since these courses were published. Thank you in advance.
IS cash from operating activities similar to free cash flow? yahoo finance doesn't show cash flow from operating activities but has a free cash flow section
What is the line "financing Cash flow items? -- why is it positive in one case when its dependents are negative? Thank you.
first i will say thanks for the video i just now exposed.
second i have a question: in minute 11:00 you say kodak sell assets..where i can find this info?
thanks in advance
So what number would you look at to calculate Cash Flow per share? (Besides the Denominator being Average Shares Outstanding).
im now gonna start watching this on and on.. now on my lesson 2.. thanks :)
What information is in the income statement that's really missing in the cash flow statement?
Should we need to look the technical analysis of a stock for long-term is it necessary
Your efforts are greatly appreciated
thank you man! please tell me how can I interpret "Issuance(Retirement) of Debt"
you are doing some amazing work,keep it up!
Ola..Morningstar site does not show negative numbers in red color or with the - sign. Numbers between parentheses means Negative?? Thank you!!
yes, parenthesis means it's a negative number
Big help!!Thank you from Japan.
Hello Mr. Preston,
loved ur lessons. I would like to know about “How to read Income Statements and Balance Sheets” when u will upload a video on that?? kindly let me know.. Thank you...
Could u plz help me on this!!
Check the course 1.
Thank you, Preston. I had a chance to watch the Owner's Earnings video. So would you say that Net Cash (Ending Balance) is that Free Cash Flow?
if I see a positive # under net borrowing in financing activities, is that mean the company is borrowing money?
What website is he using for this data
Sears was an amazing short stock since 2012.
where are the expenses in the operations going to ?
Great work i was waiting for this module thanks a lot........
You sir are a saint.
Can't wait for the next video!!!
Thank you so much for this useful data! Greatly appreciated .
how can I find the Net Borrowing amount?
wish msn money was still there today with the same layout, it used to be so clear now its a whole mess :(
Does this video get cut off?
Preston one day when i get decently well off from stocks.. i will make a sizable donation to your company Inshallah(if god wills). Man you did a great work with these videos.
angel john thank you. I will too..good to see i theres two of us here
really? -_-
How many years of cash flow statements do we Have To watch for To have a trend ?
More than one.
where do i find information about when a company pays out dividends ? eg quartley ,semiannually or yearly
Check the investors section of the company's website (if it is publicly traded) and look for its quarterly/annual financial statements and/or its annual SEC 10-K report. The timing and amount of stock dividend payouts are typically detailed in the statement notes where the company explains their plans for the upcoming year/quarter. You can also obtain a company's annual 10-K report from the Federal SEC website.
Ahh... the playlist is out of order 🙄... i was so confused
Fantastic tutorial! Thanks so much.
Hi preston what does it mean if financing activities are positive. And is it bad if they are consistently positive?
Maybe yhey are acquiring debt. It is bad, I think, if debt ratios are over 50, if they are over 100% it is too much risk, maybe in both cases they have liquid ratios below 1
Great work! Awesome knowledge! Thanks for sharing!!
Thank you for the lesson
So, Is net change in cash the profit, if positive?
Not really. The perception is quite wrong here. The operating income is the the 'actual profit' from which they spend all these. The net change is just the extra cash from the profits they make, which they haven't used for investing or paying back the debts, or anything at all. Its just the profit they've left untouched.
This was incredible help
Hi Preston ! Is it possible that a company has negative operating, investing and financing net cash ? If yes, what does it mean ?
Thanks in advance !
If they have negative operating it means they are loosing money
Thank you very much for this well thought out video.
1000000k likes....wonderful lessons ...
very helpful. thank you for the lesson
is there a lesson 26?
Hello from 2020 Kodak is doing great
thanks for the knowledge sharing
msn money link please .... as seen in the video
Perfect video
Thank you very much aubuti 👍🏻
This is amazing! Thanks for this.
Very helpful, thank you.
Any book you recommend?
TheKOng2000 I'd recommend "the intelligent investor" by Benjamin Graham to get you started. Then once you've read that get your teeth into "Financial Shenanigans" by Howard M Schilit and Jeremy Perler.
Thank you, very instructional
you said that if a company buys back it's shares, it's a good thing for the shareholders, because their shares are more valuable. Is that right? I thought that a company can simply release let's say 20% of their bussiness as shares. If they buy back 10%, they will own 90%, but it should have absolutely no affect on value of the remaining shares. If it is not correct, any company could just release millions of shares making your shares worthless due to inflation and make itself the owner of 99.99% of the business for free.
a company like coca cola reducing the number of shares would increase the damand for the shares, and would increase the market cap. for example: frist 10 customers get 80% discount, youre going to get a bigger crowd trying to get a cheap whatever.
Lets have a generic example:
[Before the company buying back the shares]
Lets say the market cap of a company is 30 USD
And they have 10 shareholders.
The value of each share is 30/10 --> 3 USD
Lets say they bought back two shares.
Value of each share now becomes --> 30/8 ~~ 3.75 USD > 3 USD.
Throw in more variables like the Cost of buying back the shares, The end value of share would be lesser. But at large scale, the end value would anyways be greater than the value before buying back the shares.
When a company buys back it's common stock, it reduces the outstanding shares and temporarily boosts (EPS) earnings per share.
Private Equity companies operate differently ! Reinvest the earnings into more real estate deals/ capital expenditures!
wen they buy back the shares the demand goes up , with less shares in circulation with high demand and low supply forces the the value up
Thank you very much! 😑🙏🏼
This, is a damn good video.
YES, IT IS.
Thank you 🙏
are you a trader or an invester for income?
you my friend are a god
very helpful. thank you
Thanks you sir 😘
more detail!
Thx for making viewers less stupid :) . Good job
Hello, is it a good sign if a company is earning from its investing activities ?
Yes, more investments, more extra cash. As long as its a good,stable investment.
great video
My coment was is 100 th one lol and iam watching this in 2020
Awesome. Thank you!!
very good ~
What, no goodbye?
U r king
tHANKS a lOT......
A
MSN money.. wow..
Great video