Question

Year Ended December 31 2017 2016 2015 (in millions) Consolidated Statements of Cash Flows Data Net cash provided by operating activities Net cash used in investing activities Net cash used in financing activities Purchases of property and equipment Depreciation and amortization Share-based com S 24,216 S 16,108 S 10,320 (9,434) (139) (2,523) 1,945 2,960 (20,038) (5,235) (6,733) 3,025 3,723 (11,739) (310) (4,491) 2,342 3,218 pensation

Required: Compare the cash flow from 2015-2017.

What kind of trends can be concluded from the net cash used in investing activities?

What kind of trends can be concluded from the net cash used in financing activities?

Answer 1

The operating cash flows have increased throughout 2015 to 2017. It shows that the business is conducting its operations and managing the working capital effectively. The increase in the investments made in fixed assets produces more amount of depreciation and amortization costs and as these are non-cash expenses, they reduce the amount of actual cash outflow in form of tax and hence, the operating cash flows increase.

The continuous rise in the cash used in investing activities is due to heavy investments made in the property, plant and equipment. It shows that the business is incurring more amounts towards capital expenditures.

The increase in the cash used in financing activities shows that the business is paying more amount of returns to its investors and other finance providers than the amount raised during the period. It creates a positive cash flow to the investor but decreases the cash inflow for the company and hence, the amount of cash used in financing activities increases.