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Analyzing Cash Flow

Statement

Business Life Cycle

Start Up

Growth

Maturit
y

Decline

Cash Flows in the Start-Up Phase


PROFITABILITY

CFO

CFI

CFF

Negligible Sales

Negative

Highly Negative

Highly Positive

Highly Negative

Higher Credit to
Customers

Capacity Building
and Expansion

Higher Discounts

High Funding
Needed for
Operations and
Expansion

No Proceeds from
Sale of Assets

Higher Inventory
Buildup
High Costs due to
inefficiencies and
low scale

Lesser Credit from


Suppliers

Lesser Debt & More


Equity

No Dividends and
Interest

Cash Flows in the Growth Phase


PROFITABILITY

CFO

CFI

CFF

Sales Picking Up

Less Negative/
Positive

Negative

Positive

Continuous
Expansion and
Capacity Buildup

Debt Funding now


available

Positive

Discounts Stabilizing
Higher Inventory
Buildup & Credit to
Customers
Some Credit from
Suppliers

Some Tax Expense


as Book Profits are

Cost reduction due


to scale and

Interest Cost
No Dividend as
funds are reinvested

Cash Flows in the Maturity Phase


PROFITABILITY

CFO

CFI

CFF

Positive

Highly Positive

Slightly Negative

Negative

High Cost Efficiency


due to scale

No additional
avenue for
Investment

Repayment of Loans

Sales High &


Stabilized

Stability in Working
Capital Assets like
Receivables and
Inventory

Inflation Adjusted
Investment in Assets

Higher Dividends
Reducing/ Stabilizing
Interest
Buy Back of Shares

High Tax Outflows


High Credit from
Suppliers

Cash Flows in the Decline Phase


PROFITABILITY

CFO

CFI

CFF

Low & Declining

Slightly Positive &


Declining

Positive

Negative

Sale of Redundant
Capacity and Assets

Repayment of Loans

Sales Saturated &


Declining

Working Capital
Assets Reducing
High Tax Outflows as
Capital Investments
go down and Assets
are sold
Cost inefficiencies
due to reducing
scale

Higher Dividends
Concentration of
Manufacturing
Facilities may
improve margins

Reducing Interest
Buy Back of Shares

Cash Flows before exit from


Business
PROFITABILITY

CFO

CFI

CFF

Negative

Most likely to be
negative

Positive

Negative

Net sale of assets

Repayment of Loans

Even if positive,
mainly because of
Depreciation,
Reduction in
Working Capital
Assets

False Capitalization
of Expenses

Almost no dividend
Capital funding
drying up

Cash Flows and Profits - Interglobe Aviations Ltd.


3000

2000

1000

0
Oct-06

Feb-08

Jul-09

Nov-10

Apr-12

Aug-13

Dec-14

-1000

-2000

-3000

-4000

Cash From Operations


Cash from Financing Activities

Cash From Investment Activities


Profits Before Taxes

May-16

How is Apple doing?


80000

60000

40000

20000

0
2010
-20000

-40000

-60000

Cash from Operations


Cash from Investment Activities
Cash from Financing Activities
2011

2012

2013

2014

Amazon: Guzzling the market share


8000

6000

4000

2000

0
2010
-2000

-4000

-6000

Cash from Operations


Cash from Investment Activities
Cash from Financing Activities
2011

2012

2013

2014

A Dying Company: Aeropostale Inc.


300

200

100

0
2010
-100

-200

-300

2011

2012

2013

2014

Cash from Operations


Cash from Investment Activities
Cash from Financing Activities

KPR Mills - Sales


Net Sales
2500

2000

1500

1000

500

0
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

KPR Mills Profits Before Taxes


Profit Before Taxes - KPR Mills
200.00

150.00

100.00

50.00

0.00
38047
-50.00

38412

39873

40969

38777

40238

39142

39508

40603

41334

41699

KPR Mills - CFO


CFO
400.00
350.00
300.00
250.00
200.00

CFO

150.00
100.00
50.00
0.00
38047
-50.00
-100.00

38412

39873

40969

38777

40238

39142

39508

40603

41334

41699

KPR Mills - CFI


CFI
0.00
38047

38412

39873

40969

38777

40238

39142

39508

40603

41334

41699

-50.00
-100.00
-150.00
-200.00
-250.00
-300.00
-350.00
-400.00
-450.00

CFI

KPR Mills - CFF


CFF
400.00
300.00
200.00
100.00
0.00
38047
-100.00
-200.00
-300.00

CFF

38412

39873

40969

38777

40238

39142

39508

40603

41334

41699

KPR Mills Inventory Levels


Inventories
300
250
200
150
100
50
0
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

KPR Mills Trade Receivables


Trade Receivables
250

200

150

100

50

0
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

KPR Mills Dividends


Dividends
0
38047

38412

39873

40969

38777

40238

39142

39508

40603

41334

41699

-5
-10
-15
-20
-25
-30
-35

Dividends

KPR Mills Stock Performance


KPR Mills Stock Performance
1400
1200
1000
800
600
400
200
0