#Stock-Market  #Fundamental-Analysis  #Finance 

📋 Topics Covered

  • Introduction to Cash Flow (CF) Statement
  • P&L vs. Cash Flow differences
  • Components of Net Cash Balance (CFO, CFI, CFF)
  • Defining Free Cash Flow (FCF)
  • Financial Result Timelines and Annual Reports

💵 Cash Flow (CF) Statement

  • It reveals how much cash the company is actually generating.

  • Example: If sales are Rs. 100:

    • If the full Rs. 100 is received in cash ➡️ CF is positive on the full amount.
    • If a portion (say Rs. 30) is sold on Credit (Udhari), then CF only records the Rs. 70 received.
    • However, the P&L statement will still record the full Rs. 100 as Revenue.

  • Key Difference: P&L Statement vs. CF Statement

Cash Sales: 15 items * 25K = Rs. 375K
Credit Sales: 5 items * 25K = Rs. 125K
Total Sales: Rs. 500K

P&L Statement Includes --> Total Sales (Cash + Credit)
CF Statement Includes --> Only Cash Sales (Rs. 375K)

🧮 Net Cash Balance

The cash flow statement is broken down into three different business activities:

  1. Cash Flow from Operations (CFO)
  2. Cash Flow from Investing (CFI)
  3. Cash Flow from Financing (CFF)
  • Net Cash Balance = CFO + CFI + CFF

⚙️ Cash Flows From Operations (CFO)

  • It reflects the company’s net income, translated purely into cash movement.
  • CFO is the most preferred metric among the three, as it shows core business health.

📈 Cash Flows From Investing (CFI)

  • Reflects the result of investment gains and losses.
  • If CAPEX (Capital Expenditure) increases, it generally results in a reduction in CFI cash flow (shown as negative).

🏦 Cash Flows From Financing (CFF)

  • Accounts for external activities that allow a firm to raise capital and repay investors (e.g., issuing stock, taking loans, paying dividends).

⚖️ Comparisons & Metrics

  • CF / PAT > 1 ➡️ Considered Good (Cash generation is higher than accounting profit).
  • Ideally, EPS should be close to Cash Flow Per Share.
  • Exception: CF isn’t very useful for Banks, NBFCs, Infrastructure, or Real Estate companies due to their distinct debt and asset structures.

💸 Free Cash Flow (FCF)

  • This is surplus money left over after operations and essential capital expenditures.
  • Used for:
    • Corporate Acquisitions.
    • Paying Dividends to shareholders.

📅 Financial Result Declarations

  • Reference Video: Cash Flow and Result Analysis
  • Corporate earnings results must be declared within 45 days of the end of a quarter.
  • Financial Quarters:
    • Quarter 1 (Q1): April – June
    • Quarter 2 (Q2): July – September (Half-yearly)
    • Quarter 3 (Q3): October – December
    • Quarter 4 (Q4): January – March (Annual)
  • Results are typically accompanied by a Fact Sheet (Press Release) + Presentation.

🏢 Company Investor Presentations

📚 Annual Report Components

A complete Financial Statement (FS) in an Annual Report includes:

  • Balance Sheet Analysis
  • P&L Analysis
  • Cash Flow Analysis
  • Notes to Accounts
  • Shareholding Patterns