Introduction to Financial Statement Analysis. Chapter 3: Cash Flow Statement

Now that we understand the statements capture cash flow transactions as cash pulses through the business, we can start with the statement of cash flows. We look at the three big accounting buckets: cash provided by operating activities (CFO), cash used by investing activities (CFI), and cash used by financing activities (CFF). We see that CFO by itself is not an accurate gauge of operating cash flow. We look at two useful definitions: free cash flow to equity (FCFE) and free cash flow to the firm (FCFF). In order to make these definitions real, we analyze the recently quarterly report (10Q) published by International Speedway (Ticker: ISCA), the owner of the fantastically popular NASCAR series. In about 20 minutes, we calculate the FCFE and FCFF for ISDA.

(50 min.)