BC ACCOUNTING
Saved by @AnmolNarula11

Accounting is the language of business.

If you buy stocks, you MUST learn how to read a Cash Flow Statement.

Here’s everything you need to know:

 The cash flow statement shows how cash moves in and out of a company over a period of time.

The most common time periods are:
▪️1 Quarter
▪️1 Year
▪️Year-to-date (usually 6 or 9 months)

The time period is at the top. Here's $NFLX recent cash flow statement time period.
Some companies show the cash flow statement in their earnings press release, but many don’t.

You can find the cash flow statement by looking at:
▪️10-Q (Quarterly Report)
▪️10-K (Annual Report)
▪️Fnancial aggregators such as @theTIKR,
@CMLviz, @themotleyfool, @YahooFinance
There are three main segments to a cash flow statement.

1. Operating Activities
2. Investing Activities
3. Financing Activities

Companies get some leeway with how they breakout each segment, but they all follow this basic structure.
Let’s start with Operating Activities.

This segment STARTS with net income (the bottom number of the Income Statement).

It shows cash movements from all normal operational business activities.
Non-cash expenses are ADDED back as a source of cash.

Common categories:
▪️Depreciation: Value of asset decreasing over time 
▪️Amortization: Expensing a pre-paid cost over time
▪️Stock-Based Comp: Paying employees with equity
Next is Working Capital, which can ADD or SUBTRACT from cash flow:

Categories:
▪️Accounts Receivable: Sales that haven't been collected yet
▪️Accounts Payable: Bills that haven't been paid yet
▪️Inventory: Value of product you haven’t sold yet
Once all cash adjustments are made, the net is a company’s Operating Cash Flow.

Think of this number like a company’s Net Income, but in actual cash.
The next section is called Cash Flows from Investing Activities.

The shows the cash gains and losses from investments the business has made.
Categories:
▪️Capital Expenditure (CAPEX): Money spent to acquire/maintain physical assets such as property, plants, buildings, or equipment.
▪️Acquisitions: buying another company
▪️Proceeds from sale of investments: Cash recieved from selling CAPEX or acquisitions
We can now calculate Free Cash Flow (FCF)!

FCF is the cash that is left after a company has paid for its Operating Expenses and CAPEX.

Many investors (myself included) consider this to be a superior way to calculate a company’s actual profitability.
Section 3 is Cash Flows From Financing Activities.

This measures the cash movements between a company and its owners (shareholders) and its creditors (bondholders).
Common categories:

▪️Debt: Cash gained/lost from borrowing/repaying debt
▪️Stock: Cash gained/lost from issuing/repurchasing stock
▪️Dividends: Cash payments to shareholders
The final section shows the total changes in cash balance during the period.

Its shows:
1⃣Sum of Operating Activities + Investing Activities + Financing Activities
2⃣Starting Cash Balance
3⃣Ending Cash Balance
The cash flow statement is complex.

Watching an example is VERY helpful

@brian_stoffel_ and I made a YouTube video about the cash flow statement that uses $NFLX as an example

Watch it here: https://t.co/VdpwQq7SYu
Enjoy this thread?

Follow me @BrianFeroldi

I regularly tweet about money, investing, and personal growth
Want to learn how to invest?

Subscribe to my YouTube channel.

We teach investors how to research stocks & the most important investing lessons we've ever learned.

https://t.co/lWwcb1JdD1
If this thread was helpful, you’ll also enjoy my thread on how to read an income statement

https://t.co/75PRb0EenB
Finally, here’s my thread on how to read a balance sheet

Happy investing!

https://t.co/Fdqn8qPkXr

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1/ My Mission: To Spread Financial Wellness (thread)

Here’s what "financial wellness" means to me

⬇️⬇️⬇️⬇️⬇️⬇️⬇️⬇️⬇️⬇️

2/ Mindset

Humans are programmed to think short-term

Evolutionary, thinking short-term makes sense. It helps with survival.

Financial wellness is all about training yourself to develop a long-term mindset

Not easy -- it takes practice


3/ Mindset

If you join the right tribes, you can’t help but improve

My favs:
@AffordAnything
@ChooseFiFI
FinTwit
@MicroCapClub
@themotleyfoolFool
@visualizevalue

Twitter / Podcasts / Blogs / YouTube -- when used correctly -- are amazing


4/ Mindset

Educate yourself - constantly!

Especially about:

1⃣Money
2⃣Relationships
3⃣Health

These 3 categories have an outsized influence on all areas of your life

Books


5/ Career

In the beginning, focus on growing your income

Do more than what is expected

Become a lynchpin

Find a career that you ENJOY (<- important!) that also has high-income potential

Start a side hustle (<- important!)

Build your talent
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Worried about the recent market drop?

Here are 24 top investing quotes from Buffett, Bogle, Graham, and more that can help🧵

"If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks."

-- John Bogle

"Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble."

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My 🔟 Biggest Investing Mistakes 🧵

1⃣Only looking at the share price

I bought penny stocks at the start

My logic: 100 shares of $1 stock > 1 share of $100 stock

WRONG!

The price of 1 share is meaningless!

What matters is how great the company is!

2⃣Only looking at dividend yield

I bought stocks with 10%+ yields

My logic: 10% yield > 1% yield

WRONG!

The dividend got cut and the share price dropped -- a double-whammy!

A high yield is Wall Street's way of saying "this yield is not sustainable, watch out"


3⃣Selling a great stock early

I bought $DXCM in 2007 for ~$6

I sold it 1 month later after a 15% gain

Current price: $412.58

I was in a rush to take profits, so I missed out on HUGE upside

If the opportunity is huge, hold!


4⃣Not buying a great stock due to valuation

I've made this mistake over and over again

I didn't buy $ZM at $80 because the valuation was "insane"

Current price: $455

If you like everything about the company except the valuation, but some

Even if it's just a little bit
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One of the best debates I have seen in recent history between @SunilBSinghania and Saurabh Mukherjea.

TOPIC: Has P/E lost its relevance?

I resonate more with Sunil’s side. Here’s a thread 🧵 on the main points made by him:

@varinder_bansal @safiranand @myvaluepicks

1/ Importance of PE

PE is not the only factor but an important factor.

Ultimately the growth has to justify how much PE are you paying for the company.

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In hindsight we can say that from 2001 to 2021, a company grew at 25 % and we should have given a very high PE to it.

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Things have become more competitive.

New generation don’t really care much about legacy.

Convenience and affordability matters more.

The longevity and sustainability of growth has changed dramatically.

4/ Company that require a big investment - There is opportunity to invest big.

Company 1: Mkt Cap of 50 cr
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Thread 🧵explaining #ROE & #ROCE and its use in #FundamentalAnalysis

(Must read for #FA learners)

🙏Like & RT to spread learning with all 🙏

Views Welcome 👉 @dmuthuk @Vivek_Investor @datta_arvind @caniravkaria @FI_InvestIndia @AdityaD_Shah

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1⃣

Return on Equity (#ROE) and Return on Capital Employed (#ROCE) are two important Financial Ratios used in #FundamentalAnalysis of Stocks.

#StockMarket #Investing

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#StockMarket #Investing #FundamentalAnalysis


3⃣

#ROE is a measure of how much net profit a company is making for every rupee invested by its shareholders in the company.

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4⃣

However, you should not trust high ROE blindly. Biggest drawbacks or weaknesses of ROE is that it completely ignores debt.

Hence for companies having high levels of debt, ROE will give a higher but misleading value & therefore we need to look at #ROCE along with #ROE.
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In those days, working capital belonged to the shareholders.

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That was the way capitalism worked

Nowadays, of course, the accounting is not realistic
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@Dinesh_Sairam @_CreatingWealth @suru27 But I guess Kovai caters to the lower end of the spectrum so it's impact is much limited and perhaps be a beneficiary.
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दधीचि ऋषि को मनाही थी कि वह अश्विनी कुमारों को किसी भी अवस्था में ब्रह्मविद्या का उपदेश नहीं दें। ये आदेश देवराज इन्द्र का था।वह नहीं चाहते थे कि उनके सिंहासन को प्रत्यक्ष या परोक्ष रुप से कोई भी खतरा हो।मगर जब अश्विनी कुमारों ने सहृदय प्रार्थना की तो महर्षि सहर्ष मान गए।


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\u2728Anshika Sharma
✨Anshika Sharma
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Low-risk, High-return stocks are what we look for relentlessly

But many of them we know but ignore
some of them don't grab financial headlines

Here are 10 low-risk, high return stocks (that we ignore):

What I mean by “high-return”?

These stocks have OUTPERFORMED the market:

💹Chart with upwards trend Since IPO
💹Chart with upwards trend Over the last 5 Years or since IPO

These are all long-term winners that will keep on winning

What do We Mean by “low-risk”?

A combination of:

❣️Great management
❣️Broad moat
❣️Financially strong
❣️High ROCE
❣️Low Disruption/Dilution/Volatility
❣️Consistent Organic Growth
❣️Assorted Customers/Suppliers
❣️Low debt

1-#CDSL

A depository is a big business and will grow continuously, Its a sustainable business
cause "Market hai toh CDSL bhi hai or rahega"


2- #Dixon

High Management Efficiency with a high ROE of 19.30%
Healthy long-term growth as Net Sales has grown by an annual rate of more than 30%
High Institutional Holdings
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