A cash flow statement is the list of where cash came from and where it went over a period. It has three sections and they're always in the same order.
A cash flow statement is the list of where cash came from and where it went over a period. It has three sections and they're always in the same order.
Operating is cash from running the business. Investing is cash spent on things that last. Factories. Equipment. Other companies. Financing is cash moved between the company and the people who fund it. Borrowing. Repaying. Dividends. Buying back shares.
Free cash flow is operating cash flow minus capital expenditure. It's the cash the business made that it didn't need to reinvest in itself. It's the number investors watch most.
Apple for the year ended September 30 2023. In millions.
Operating cash is bigger than net income. $110,543 million against $96,995 million. That's the day 5 gap in the other direction. Depreciation was counted as a cost on the P&L but no cash left. And Apple's suppliers financed it. Day 4.
Free cash flow. Derived. $110,543 million minus $10,959 million is $99,584 million. Apple made almost a hundred billion dollars in cash it didn't need.
Where did it go? Look at financing. $77,550 million on buybacks. $15,025 million on dividends. That's $92,575 million returned to shareholders. About 93% of free cash flow. Apple doesn't hoard cash. It hands it back.
The trap is treating investing outflows as bad news.
A company spending heavily on factories shows a big negative investing number. That's growth. A company that stops investing shows a small one and looks like it's generating cash. It might be starving itself. Read investing alongside the business. Is the spend building capacity or plugging holes?
Same for financing. A big negative number can mean buybacks from strength like Apple. Or debt repayment under pressure. The statement tells you what moved. Item 7 tells you why.
You're briefing a board member who says Apple should keep more cash instead of buying back shares.
Find what Apple returned to shareholders in FY2023.
$77,550 million in buybacks plus $15,025 million in dividends. $92,575 million.
Find that as a share of free cash flow.
$92,575 million divided by $99,584 million is 0.93. About 93%.
Name the cash Apple started the year with. Use day 3.
Cash and equivalents of $29,965 million plus marketable securities of $31,590 million at year end. About $62 billion in near cash.
Reply in one sentence.
Apple returned 93% of its free cash flow and still ended the year with about $62 billion in cash and securities. It doesn't need more.
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