Domina las habilidades técnicas necesarias para analizar estados financieros y declaraciones. Después podrás aplicar estas habilidades a un reto empresarial del mundo real como parte de la Programa Especializado de Fundamentos Empresariales de Wharton.
INSERT ES .SRT 3.4: Compañía 3M: Flujos de Efectivo
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Del curso dictado por University of Pennsylvania
Introducción a la Contabilidad Financiera
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De la lección
Semana 3: Flujos de Efectivo
¡El efectivo es el Rey! Comenzaremos con la clasificación de los flujos de efectivo divididos en operaciones, inversión y actividades financieras. Luego, trabajaremos en preparar y analizar los Estados de flujo de efectivo. Abarcaremos el caso de la nueva compañía preparando y analizando sus estados de flujo de efectivo. Finalmente, discutiremos las diferencias entre Ganancias, Efectivo de Operaciones, EBITDA y Flujo de efectivo libre.
Conoce a los instructores
Brian J BusheeThe Geoffrey T. Boisi Professor
Accounting
Hello, I'm Professor Brian Bushee, welcome back.
In this video, we're going to end our week looking at cash flows,
with a look at the 3M company's cash flow statement.
We're going to take a look at their actual statement,
plus the supplemental disclosures about the statement in the footnotes, and
the discussion of the cash flow statement in their management discussion and
analysis, or MD and A section.
Let's get started.
3M's statement of cash flow is on page 51 of their annual report.
First thing I'd like to look at is this breakdown of operating, investing,
and financing activities.
To see what kind of stage or life cycle the company is in.
So 3M throws off about 5 billion of cash from operations every year, pretty steady.
They have cash outflows from investing activities of about 2.6
billion every year.
And they also have net financing cash outflows of about 2 billion,
other than a blip in 2011.
So this is sort of the classic mature company profile.
You've got products that are essentially cash cows, they're just throwing off cash,
things like post-it notes and scotch tape, things that we can't do without.
They're still reinvesting a moderate amount back into the company,
back into long term assets, and we'll look at this more in a second, and
they are net cash outflows for financing.
So, they don't have to borrow, they don't have to raise money to
fund their operation to their investments anymore.
Instead, their operations are able to fund all of their investing activities and
still throw off some cash that they can use to pay
off debt or repurchase equity or pay dividends.
So just to get some more insight into this, one thing that's often good to look
at is comparing depreciation to purchase as a property plant and equipment.
Again, it's very rough, but if you view depreciation as using up
your fixed assets, capital expenditures obviously is acquiring new ones,
it looks like 3M's at about replacement level.
So they are investing a lot in new PP&E, but
it's sort of replacing the things that they're using up.
They do have, though, some active acquisitions.
So about a billion or so in 2012.
And then there's a lot of activity with marketable securities.
So they bought about 5.5 billion in marketable securities,
but then they sold or had those almost all mature within 2012.
So I think what happens is 3M is throwing off a lot of cash.
If they don't immediately have an acquisition in mind, or
immediately have purchase of property plan equipment,
they plow it into marketable securities and investments.
And then when those opportunities to make an acquisition or by PP&E Comm,
they liquidate the marketable securities and use that to go out and
make their acquisitions.
So it's almost like they're serving as their own bank by
buying these marketable securities, holding their cash,
getting some return, waiting until they can invest it.
And then in the financing section, we see a lot of the financing cash out flows as
purchase of treasury stock, that's probably for stock options.
And then there's a big dividend that they paid to shareholders.
Which again is another example oftentimes of a mature company, that if you don't
have a full set of investments that you can plot all your cash back into,
you may as well just pay it back to your shareholders, and
let them reinvest it somewhere.
I think you're ready to do these kinds of life cycle or growth analysis on your own.
So here's what I want you to do.
After the video's over, go on the internet, find a firm that you're
interested in, take a look at their cash flow statement and see what you can learn
by looking at the company's operating, investing, and financing cash flows.
Now let's dig in to the operating section a bit more.
So we start with net income ignore the non-controlling interest stuff for now and
just view it as net income.
Nice steady growth in that income indicating that they are consistently
able to price their products enough to cover the costs of running the business.
And typical of a mature company, you have this steady profitability.
That steady profitability turns into steady cash flow, so
very mature, well performing, humming along nicely company.
One of the big discrepancies between that income and
net cash from operations is depreciation amortization.
Now remember that's not a source of cash even though it looks like it here.
Remember depreciation reduces net income.
It's non-cash so we have to add it back to get the cash from operations.
Fairly big number for 3M because it does a lot of manufacturing and
manufacturing companies tend to have high depreciation amortization.
Then we have a number of other non-cash expenses.
So things like pensions, stock-based compensation,
and we have some excess, deferred taxes, and excess tax benefits.
So first the pension and post-retirement contribution,
stock based compensation, these are things we recognize as expenses now.
Which means they’re part of net income, but, the cash is either paid in the future
as is the case for pensions and post retirement benefits,
or the cash really isn’t paid as it is for stock based compensation.
Although part of it is you're buying back treasury stock to use the satisfy options,
but any case, there's no cash flow this period for these expenses.
And we'll talk more about the stock based compensation later on to pensions and
post-retirement.
That's beyond the scope of this course.
You'll have to come and take my course at Wharton, my elective,
to see more on pensions and post-retirements.
The deferred taxes, we'll obviously get to later in the class.
So then we get to the section on changes in assets and liabilities.
These are the changes in working capital, and what we see is
the big chunk here are accounts receivable and inventory are negative.
So let's think about what that means.
Negative number on the operating cash flow under the indirect method means that these
amounts must be going up on the balance sheet.
Accounts receivable goes up as a non-cash asset,
to stay in balance we have to subtract it on the cash flow statement.
And yes, even though you can't see it, I am doing up and down arrows with my hand.
Inventories go up on the balance sheet.
Non-cash asset going up, we have to subtract that on the cash flow statement.
Accounts payable is also going up.
Now remember that's a liability so if accounts payable, a liability, increases,
it's on the other side of the balance sheet equation.
We have to increase it on the cash flow statement.
So these could represent either good or bad news.
Bad news scenario would be our customers are not paying us, we're
having trouble selling our inventory, we're having to stretch our payables.
That's probably not the case here given the nice growth in profitability that's
going on and so a more likely story is it's still a growing company.
So, during the year we're making a lot of credit sales at the end of the period.
We're building inventories in anticipation of future sales.
We are getting more raw materials at the end of the year in anticipation of
production and so based on other things I've seen, it probably is a good
news scenario that this representing growth and working capital rather than bad
news where you can't collect receivables and you can't get rid of your inventories.
So overall from the face, the statement,
it looks like a mature company that still has some growth potential.
Now, we're going to look at some other sections to try to
get some additional information about what's going on with cash flows.
And yes, while you're looking at those cash flow statements that
you've downloaded from the internet,
you should also take a close look at the operating section.
Look at net income, look at cash map operations and look at all the things that
caused differences between the two to see what kind of items that you would have
questions about or want to learn more about to understand why the company's net
income is different from its cash flows.
Now I've jumped ahead to page 69, where we have footnote 6,
which is supplemental cash flow information.
So if you remember back to the first video of the week, I said that there has to be
a disclosure of cash, taxes paid, and cash interest payments.
And as we talked about in, I think the second to last video,
that disclosures there, so if people want to remove cash interest and
cash taxes from operating cash flow, they have the number.
So in this footnote we see the cash taxes, and the cash interest.
So if you want to start with the cash operations and the cash flow statement
in terms of doing some kind of valuation to measure operating cash flow, but
you don't want tax or interest in there.
You can pull those numbers out using this disclosure.
One last section to look at, related to cash flows,
is in the management discussion analysis which is on page 36.
Remember the MDNA is the section where 3M management is supposed to provide
their own narrative to explain what happened during the year.
So it'll give us more insight into some of the numbers that we saw in
the cash flow statement.
They repeat their operating section and
talk about what happened in terms of the cash flows during the year.
The big reason for
the year in year increase in cash flow is net income went up.
They do note that accounts receivable inventories and
payables have increased by 312, compared to increase of 484 last year,
but they really don't talk much about what happened with that.
Then, at the bottom of the page, they disclosed free cash flow.
And as I said a couple videos ago, this is a voluntary disclosure.
Notice it's labeled as a non-GAAP measure.
That means that there's no requirement by the SEC or
the FASB to provide this measure, which also means there's no standardization.
Companies can define this measure however they want.
And when they do that, they have to alert investors and
analysts that this is a non-GAAP measure.
So it's not standardized.
So, remember free cash flow is supposed to be operating cash flow minus
investment in the future.
So, we've got net cash from operations,
from the cash flow statement as 3Ms operating cash flow.
And then they used purchase of PP&E as their measurement of investment in
the future, investing in new property plan equipment
which gives them a pretty high free cash flow.
And that's actually a pretty good definition, I've seen a lot worse.
That is a pretty good definition of free cash flow, but
again before you would use this number, you want to make sure
you know it's in the definition and that you're comfortable with it.
On the next page, we have cash from investing activities, and
what they've done here is they've netted all the marketable securities action
into a small number.
So instead of showing on the face the 5 billion they bought,
and then the almost 5 billion they sold, they just show a net number.
So it really highlights that the big drivers of cash out flows were purchased
of PP&E and acquisitions.
And they tell you the PP&E is expanding manufacturing capacity and key growth
markets, especially international like China, Turkey, and Poland.
And so we can see that they do still have growth opportunities and
a lot of those growth opportunities seem to be international.
For acquisitions they refer us to note two.
You can go there and look, I'm probably not going to jump ahead and look at that.
And then finally they talk about cash flows from financing activities.
So remember the big chunks here were purchase of treasury stock,
and the treasury stock they say is for stock based compensation.
So we'll talk about this later in the course but
basically stock based compensation is where you award your employees
either stock options or stock grants.
You could either issue new stock to satisfy that, or what most companies do is
they just buy back their own stock, and then either sell if to their employees or
give it to employees under these stock base compensation plans.
And then the other big chunk here is dividends to stock holders.
3M has paid dividends since 1916.
So, we're almost on a hundred years of dividends.
And that, again just consistent with companies that are very mature products.
Throwing off a lot of cash.
One thing they tend to do is they start paying dividends.
3M started pretty early, not sure it was post-it notes in 1916.
And the thing about dividends is they tend to be sticky.
Once you start paying them, you always want to keep paying them.
If you ever cut them, it would be viewed by the market as bad news.
So that's where we find all of the cash flow information in the annual report.
And that's going to wrap it up for our week on cash flow statements.
Hey, I was going to say that.
Well, this does wrap up our week-long look at the cash flow statement.
I know it was difficult and there were some parts that didn't
probably make a lot of sense right of the bat, but the cash flow statement is a very
important statement and we're going to be seeing it again, and again, and again.
As we look at more advanced topics and
the more you see it the more you get the hang of it.
I'll see you next time.
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