💰 HOW TO ANALYZE 🧐 A COMPANY’S CASH FLOW 💵
Cash flow is considered a very important aspect of any company's financial stability. Positive and stable cash flow can be crucial to maintaining financial health, while cash flow disruptions can lead to bankruptcy risk.
Moreover, cash flow often has a significant impact on stock valuation.
To evaluate a company's cash level, it's important to consider focusing on five key areas which we'll explore in more detail below.
1. Cash flow from operating activities
This section shows the cash inflows and outflows from the company's daily operations, such as sales income and cash paid to suppliers. Subtracting cash outflow from cash inflow, we can get the net cash flow from operating activities.
If the number is positive, it means the company's operating activities generate more cash than it consumes;
If the company's net cash flow from operating activities exceeds net income, the company typically is in a sound financial position.
2. Cash flow from investing activities
Cash flow from investing activities involves new plant construction and investments. When analyzing cash flow, it's important to pay close attention to the capital expenditures related to the purchase and sale of fixed assets.
If a company spends too much of its net income on expansion, its overall cash flow will usually be affected. Moreover, the depreciation of equipment and production lines, as well as potential future replacement costs, can further erode net income.
This may explain why many companies with an asset-heavy structure tend to have lower valuations.
3. Cash flow from financing activities
Cash flow from financing activities includes debt addition and repayment, the issuance and buyback of stocks or bonds, and dividends paid to shareholders.
Closely monitoring dividend payments and share buybacks is also key.
Even in the absence of financial outperformance, companies like Coca Cola and Oracle have seen their stock prices rise in the long term after increasing their ROE through dividend payments or boosting EPS by share repurchases.
4. Cash balance
A company's cash balance is the amount of cash it currently has on its balance sheet, as well as any short-term investments that can be quickly converted to cash.
If a company's cash balance exceeds its short-term liabilities, this indicates that it has sufficient liquidity and less immediate pressure to service its debt.
Moreover, if the company's cash balance continues to grow over time, it generally sends a positive signal to investors.
However, it's worth noting that some companies with large cash flows may use their excess funds to buy back shares or pay dividends instead of maintaining a high cash balance. As such, when evaluating a company's cash flow, it may be necessary to exclude the impact of share buyback and dividend payments to get a more accurate picture of their financial health.
5. Free cash flow
Many US-listed companies disclose free cash flow in their financial statements. It is calculated by subtracting capital expenditures from operating cash flow.
If a company's free cash flow consistently grows and exceeds its net income, it may be more attractive to investors. Besides, the market may be willing to give a higher valuation for such companies.
Moreover, cash flow often has a significant impact on stock valuation.
To evaluate a company's cash level, it's important to consider focusing on five key areas which we'll explore in more detail below.
1. Cash flow from operating activities
This section shows the cash inflows and outflows from the company's daily operations, such as sales income and cash paid to suppliers. Subtracting cash outflow from cash inflow, we can get the net cash flow from operating activities.
If the number is positive, it means the company's operating activities generate more cash than it consumes;
If the company's net cash flow from operating activities exceeds net income, the company typically is in a sound financial position.
2. Cash flow from investing activities
Cash flow from investing activities involves new plant construction and investments. When analyzing cash flow, it's important to pay close attention to the capital expenditures related to the purchase and sale of fixed assets.
If a company spends too much of its net income on expansion, its overall cash flow will usually be affected. Moreover, the depreciation of equipment and production lines, as well as potential future replacement costs, can further erode net income.
This may explain why many companies with an asset-heavy structure tend to have lower valuations.
3. Cash flow from financing activities
Cash flow from financing activities includes debt addition and repayment, the issuance and buyback of stocks or bonds, and dividends paid to shareholders.
Closely monitoring dividend payments and share buybacks is also key.
Even in the absence of financial outperformance, companies like Coca Cola and Oracle have seen their stock prices rise in the long term after increasing their ROE through dividend payments or boosting EPS by share repurchases.
4. Cash balance
A company's cash balance is the amount of cash it currently has on its balance sheet, as well as any short-term investments that can be quickly converted to cash.
If a company's cash balance exceeds its short-term liabilities, this indicates that it has sufficient liquidity and less immediate pressure to service its debt.
Moreover, if the company's cash balance continues to grow over time, it generally sends a positive signal to investors.
However, it's worth noting that some companies with large cash flows may use their excess funds to buy back shares or pay dividends instead of maintaining a high cash balance. As such, when evaluating a company's cash flow, it may be necessary to exclude the impact of share buyback and dividend payments to get a more accurate picture of their financial health.
5. Free cash flow
Many US-listed companies disclose free cash flow in their financial statements. It is calculated by subtracting capital expenditures from operating cash flow.
If a company's free cash flow consistently grows and exceeds its net income, it may be more attractive to investors. Besides, the market may be willing to give a higher valuation for such companies.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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Coach Donnie OP : * ETFs, Longs, Shorts
in that order.
does 7-10% a year, my ETFs gotta yield or earn the same or MORE on an annual basis, to be worth my time.
ETFs and Longs is the retirement and Generational Wealth. NO funny stuff in the ETFs and the Longs. Shorts is for fun and Free Cash Flow… but can occasionally also hit 2x to 10x plus, if it doesn’t go to 0. Hail Mary.
* Only invest LONG TERM in stuff that’s outperforming the market. S&P 500
* The Long Game
Recognize that investing is often about long-term growth rather than short-term gains. The market can be volatile, and understanding that ups and downs are part of the journey can help you remain patient.
* A Setback is just a Setup for a Comeback
#CoachDonnie
Coach Donnie OP : Some ‘do’s’ and ‘don’t’s’:
Do:
- Read, study, listen and learn daily. Information is power, use it to advantage.
- Ask questions! It’s silly to be shy, there are eight billion of us, and we are ALL learning.
- Buy ETFs at least 80% of your portfolio (like SPLG FTEC FHLC FSKAX VOO VGT). You don’t have to be the expert with ETFs.
- Build a base in shares through DCA or an allotment strategy using income (perhaps to weight more on equities that are down in a given moment). DCA is recommended.
- Whether growth or value, invest in that which has promise of greater comparative returns.
Growth is recommended unless you’re at retirement enjoyment protection phase.
- Know yourself. Focus on strengths and mitigate weakness, be who you are.
Don’t:
- Buy individual stocks only, especially if you don’t know what you’re doing. Hedge your bet with ETFs, Real Estate when the Cash on Cash return makes sense, Gold and Silver, Businesses, other assets.
- Overleverage, Overbuy, Overtrade. Only make a move based strong conviction.
- Forget that there is always an opportunity.
- Blindly follow others. Getting ideas is great, be sure to conduct your own due diligence as well.
- Be afraid to ‘lose’ sometimes. That is part of this exercise; accept that and move on.
- Overleverage. Stay within a safe zone and build over time.
Happy investing
Coach Donnie OP : Money is a Wicked
Master, but a Faithful 
Servant…
Money 
don’t let it master you 
we can enjoy the journey more
laugh 
this is as much about us Becoming Better as it is about Asset Accumulation.
ETF that represents the Best of Broader Market
Master
Don’t let the market chew you up and spit you out.
• Make sure you have your portfolio diversified you’re not just ALL IN on NVDA or any one stock
• Markets go up and down
Either way we’re good
• Long term investors benefit from ups and downs
Downs: everything is on sale - buy the dip but only on solid assets
Ups: assets appreciate aka rally
• 80% in ETFs like SPLG FTEC FHLC FSKAX VOO
• 20% in individual stocks that are doing well ANNUALLY
Earning 7-10% on average is good
Earning 10-20% or more per year is great
If an asset isn’t earning at LEAST 7-10% year - which we only know after a year - why keep it
* Do what’s best for you at the end of the day.
ETFs
Stocks
Real Estate
Real Estate for Cash /
Rental Properties
Businesses
Physical Gold and Silver
Art
All have Cycles
When we understand the cycles
We can buy the dips and unplug (or do nothing) when there’s downtrends, dark pool market manipulations, sell offs etc
We can also enjoy the upswings without getting caught up in FOMO and succumbing to the pressure of buying stuff at All Time Highs
Gotta enjoy yourself otherwise the market is more stressful than a job
Mindset produces Assets:
Enjoy the journey smile
#CoachDonnie
Many of us need
An S&P 500
Like SPLG (VOO)
& an ETF like FTEC (VGT)
FHLC (health) FSKAX (total market)
Don’t have to be an Individual Stock Expert
They can’t manipulate those
Don't gotta be extreme just consistent
Happy investing
Coach Donnie OP : SCARED
MONEY DONT MAKE NO MONEY 
using propaganda slander law suits etc
so we sell
BE FEARFUL WHEN OTHERS ARE GREEDY 
- WE COLLECT OUR WEALTH IN THE GREEN 
They the 1% DRIVE GREAT COMPANIES DOWN
To make the 99% fearful
THEN they (The Culture Vultures) SWOOP IN BUY EVERYTHING AT A DISCOUNT & RUN IT BACK UP to MAKE THEIR WEALTH
KEEP YOUR RESOLVE
KEEP BUYING
STAY LONG
IN THE RED: WHEN THE MARKET OR STOCKS ARE GOING DOWN
IN THE BLACK/GREEN: WHEN THE MARKET IS GOING UP
BE GREEDY WHEN OTHERS ARE FEARFUL
WE BUILD OUR WEALTH IN THE RED - WHEN THE MASSES ARE SCARED
#AssetAppreciation
#GenerationalWealth
#NoteToSelf #AppliesToUsAll
Coach Donnie OP : Propaganda is linked with Dark Pools and Market Manipulation
so they control you with fear 
and make you think it’s logic 
applies to all Long Term Assets that Bring 10-25% a year or more ROI & CAGR
Remember that.
They don’t want you to win
Remember that
We’re not Gamblers
We’re Investors, Asset Accumulators…
Too many are focused on tiny short term swings, feelings, fears, FUD, FOMO & market manipulation.
All you need to do is accumulate shares of quality solid companies and let TIME do its thing.
Example:
when NVDA is 200+ all that matters is how many shares you have. whether you paid 95 or 105 doesn't really matter
This
THINK LONG TERM.
#CoachDonnie #AssetAccumulation #AssetAppreciation
Coach Donnie OP : When it’s a Bear
Market a downtrend a sell off and/or market manipulation
(stocks and ETFs that’ll go back up 
not just anything)
Because everything’s on sale 
(realized gains) means quick taxes.
it’s Wise to either
Buy the Dip
Dollar Cost Average or
Be Patient with Positive Expectancy/Do nothing.
It’s not wise to
Sell for a loss
Listen to propaganda
Try to Time the market
Freak out
Check the stock every hour
Expect the worse
Remember 2 thangs Freedom Fam
Buy The Dips do the opposite of what “errybody and they mama” does
* Be fearful when others are greedy and to be greedy only when others are fearful.
Warren Buffet was letting us know to pay attention and when most people are too afraid to buy (Red Days)
BUY
WHY
* Bulls make money, bears make money, but pigs get slaughtered - aka don’t get too greedy
You can get paid when the market is going up or down but don’t be greedy.
TIME in the market > TIMIN the market
Investors who know what they’re doing typically do better than traders and those tryna TIME the market
Long Term
The unappreciated beauty of stocks is that they are a semi passive or passive asset/investment/vehicle with deferred taxes.
Quick cash
Many peeps end up making less than minimum wage for their time expended.
But not YOU
You’re Patient.
You’re Disciplined.
You’re the Chosen Few.
You understand Delayed Gratification.
You have Long Term Vision.
I salute you
#CoachDonnie
#AssetAccumulation #AssetAppreciation