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What do you mean by Cash Flow statement?

If a company is showing, say, $50M in Free Cash Flow on their quarterly statement, does this mean they only have 50M in total cash on hand or  did they ADD 50M to their total free cash flow in that quarter?

  • Is their a way to find out how much total cash on hand they have for investments and acquisitions? This refers to publicly traded companies.

  • Answer:

    Any numbers you see on a GAAP cashflow statement or income statement represent a change over a particular period (say, a quarter). Balance sheet numbers, on the other hand, represent a certain moment in time (say, the last day of a quarter). So, $50 million of free cash flow (which would be computed from the cash flow statement) means that $50 million of cash was produced in that particular period. It will accrue onto the balance sheet over that period as well, assuming it's not used for other things.

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The Free Cash Flow Calculation is EBIT(1-Tax Rate) + Depreciation & Amortization - Change in Net Working Capital - Capital Expenditure. It can also be calculated as Operating Cash Flow - Capital Expenditures. The FCF calculation answers the question of, "How much cash does the company have on hand after laying out money for maintaining or expanding it's asset base".  It does not mean that this is their only cash on hand.  It's just the cash that could be directly allocated to a variety of items like paying a dividend, making an acquisition or developing a new product. Free cash flow is the exact answer to your question: "Is there a way to tell how much cash do they have on hand for investments and acquisitions".  If they have 50M in Free Cash Flow, that's how much they have for items like acquisitions.  If they have 50M in FCF now but didn't have any in the previous quarter, then they did in fact generate that much Free Cash Flow in a quarter.

Paul DeJoe

On the Statement of Cash Flow, it should explicitly show the change in FCF, and the new FCF. I would assume that $50 is their total FCF after changes. If you want to find cash on hand for investments, that should be on the Balance Sheet, under Cash. There should be a category, sometimes called "restricted cash" or something to the sort, that indicates monies set aside for long-term investments and obligations. There is also a category under Assets and Cash that shows investments, which indicates the current short and long term investments the company has made.

Carl Anthony Jr

Neither really. $50m FCF means $50m FCF It doesn't mean they added $50m to their free cash flow unless they were at 0$ FCF exactly last quarter. They might have much more cash, check for CASH and Short Term Investment Holdings. Yahoo Finance has a cash / share metric for many company's. If the company doesn't have a lot of debt, it can also lever up to do acquisitions.

Bram de Haas

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