Question

Locate financial statements for a company of your choice and review the cash flow statement. What insights does the cash flow statement provide about the company’s performance, in relation to other financial statements? Cite your data source

Answer 1

The company whose financial statements that I have located is Starbucks and the financial statements are for the year ended 2018.

The company’s cash flow statement for 2018 and preceding two years shows the following results:

	Years
(Figures in $ millions)	2018	2017	2016
Net cash provided by operating activities	11,937.80	4,251.80	4,697.90
Net cash used by investing activities	-   2,361.50	-     850.00	- 2,222.90
Net cash used by financing activities	-   3,242.80	- 3,079.10	- 1,872.80

From these figures we can see how well Starbucks is managing its cash position and how well it is generating cash to pay its debt obligations and fund its operating expenses. We can see that for Starbucks its cash flow from operations for 2018, 2017 and 2016 are positive. In fact there was a substantial increase in cash provided by operating activities in 2018 and this augurs well for the company. This increase was due to changes in deferred revenue account. The company is constantly making capex (i.e. capital expenditures) and this is keeping its cash from investing activities negative. In 2018 the company even made an acquisition. Lastly the company’s cash from financing activities are negative because the company regularly pays dividends and repurchases its common stock as well.

There has been a net increase in cash and cash equivalents for all the years and hence there is no red flag and we can say that Starbucks' cash flow statement looks healthy and there is no point of concern in this regards.

Data source: Annual Report for 2018. (This is available in Starbuck's website at its 'Investor Relations' section).