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5. Cash Flow Analysis

Watch a video overview:

 

Overview: The Cash Flow analysis tool helps to evaluate a company’s cash flow. This tool also visualizes a company's Operating Cash Flow, Free Cash Flow and Net Cash Flow.


Displayed at the top of the tool is three key cash flow measures: Operating cash flow, Free cash flow and Net cash flow. Clicking on these numbers will drill down into additional detail about these key numbers.

Operating cash flow
 is simply the cash generated by the operating activities of the business. Operating activities include the production, sales and delivery of the company’s product and/or services as well as collecting payment from its customers and making payment to suppliers.

Free cash flow is the cash generated by the business, after paying its expenses and investing for future growth. It is the cash left after subtracting capital expenditure from operating cash flow. The term “free cash flow” is used because this cash is free to be paid back to the suppliers of capital.

Net cash flow is the cash left after subtracting expenditures from financing activities from the free cash flow. Financing activities include the inflow of cash from investors such as banks and shareholders, as well as the outflow of cash to shareholders as dividends.

The waterfall chart helps to identify cash-in (green) and cash-out (red).

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At the top of the tool you can change the period currently under review. You can also toggle between a monthly, quarterly or annual view of cash flow performance.

The Cash flow analysis tools helps answer the “Where is the cash coming from / going to?”  question.  In addition, this tool also help to answer the following questions:

  • What is the quality of the cash flow? 
  • Is cash flow sourced from core operations?  
  • Is cash flow diminishing? 
  • Is cash flow sustainable or subject to fluctuations?