Cash flow statement

Cash flow statement is a mandatory part of a company's financial reports since 1987. Cash flow statement records the amounts of cash entering and leaving a company. The cash flow statement enables us to understand where its money is coming from, and how it is being spent. You probably wonder where could you find those financial reports? U.S. Securities and Exchange Commission, (SEC) maintains the database available on the Internet on this location http://www.sec.gov/edgar/searchedgar/webusers.htm. There you can find a lot of information about the companies on the stock market, and one of them is the cash flow statement.

Cash flow statement looks like this (Microsoft):

MICROSOFT CORPORATION
CASH FLOWS STATEMENTS
(In millions)(Unaudited)

	Three Months Ended March 31,2006	Three Months Ended March 31,2005	Nine Months Ended March 31, 2006	Nine Months Ended March 31, 2005
Operations
Net income	2,977	2,563	9,771	8,554
Depreciation, amortization, and other noncash items	177	282	642	573
Stock-based compensation expense	374	617	1,352	1,913
Net recognized (gains)/losses on investments	(59)	(223)	(264)	16
Stock option income tax benefits	—	37	—	264
Excess tax benefits from stock-based payment arrangements	(23)	—	(67)	—
Deferred income taxes	(271)	(292)	(229)	69
Unearned revenue	3,670	3,212	10,372	9,165
Recognition of unearned revenue	(3,615)	(3,241)	(10,656)	(9,469)
Accounts receivable	972	1	368	464
Other current assets	(134)	(130)	(828)	41
Other long-term assets	(4)	40	(12)	65
Other current liabilities	229	803	(69)	283
Other long-term liabilities	270	334	743	691
Net cash from operations	4,563	5,003	11,120	12,630
Financing
Common stock issued	442	354	1,909	1,636
Common stock repurchased	(4,675)	(2,427)	(15,226)	(3,751)
Common stock cash dividends	(925)	(885)	(2,628)	(35,253)
Excess tax benefits from stock-based payment arrangements	23	—	67	—
Net cash used for financing	(5,135)	(2,958)	(15,878)	(37,368)
Investing
Additions to property and equipment	(302)	(203)	(833)	(552)
Acquisition of companies, net of cash acquired	(83)	(11)	(333)	(12)
Purchases of investments	(10,082)	(13,085)	(45,643)	(58,798)
Maturities of investments	1,208	1,454	2,900	28,191
Sales of investments	8,755	10,032	46,836	45,339
Net proceeds from securities lending	1,337	—	1,337	—
Net cash from (used for) investing	833	(1,813)	4,264	14,168
Net change in cash and equivalents	261	232	(491)	(10,571)
Effect of exchange rates on cash and equivalents	7	(8)	(9)	49
Cash and equivalents, beginning of period	4,083	3,558	4,851	14,304
Cash and equivalents, end of period	4,351	3,782	4,351	3,782

Remark: Unaudited in the title of report means that this report wasn't checked by a third, independent, party (called auditor). Each company have reasons to cheat on their financial statement, and therefore a third party, auditor is introduced.

The company in the cash flow statement has OI of 8669, and OO of 4106 which yields net cash from operations of 4563 (more cash is coming in through the operating activities then comming out).

FI is 465 and FO is 5600, which yields the net cash from financing -5135 (more cash is going out).

II is 11300 and IO is 10467, which yields the net cash from investing 833 (more cash is coming in).

If you add net cash from operations, financing and investing we get net change in cash and equivalents of 261. (the company has at the end of the previous report 4083 and with 261 it has 4351. You probably noticed that 261+4083=4344, but exchange rates also has effect on cash equivalents (7).

Cash flow statement has more details about FI, FO, II, IO, OO and OI.