Reading Financial Data - Step by Step
Cash flow & returns
Read cash generated by the business, cash returned to shareholders, and basic return ratios.
Lessons
- What is operating cash flow? - Operating cash flow is cash generated or used by the company's main operations.
- What is free cash flow? - Free cash flow subtracts capital expenditures from operating cash flow.
- Dividends and buybacks - Dividends and share buybacks are two separate cash outflow lines.
- What is ROE? - ROE compares net income with stockholders' equity.
- What is ROA? - ROA compares net income with total assets.
- Reading leverage - Liabilities / equity compares what a company owes with owners' equity.
- The current ratio - The current ratio compares current assets with current liabilities.