27. How to read a cash flow statement

Preston Pysh is the #1 selling Amazon author of two books on Warren Buffett. The books can be found at the following location:

In this lesson, we evaluated the cash flow statement of Walmart, Sears, Intel, and Kodak. The lesson provides good and bad cash flow statements so students could see the difference between risky and healthy companies. One of the key factors learned in this lesson was the importance of the operating activity and the operating activities section of the statement. Since the investing and financing activity are dependent upon the operating activity, it became obvious this section is the lifeblood of any business.

[GjergjCamaj]

Preston, 26 and 27 are out of order on the playlist. Great work btw. I haven't found anyone better.

[alexlee]

sears bankrupted now. lol. you saw it coming.

[rtmarsh]

The Cash Flow Statement is the best document to determine if you have "Vigilant Leaders." What I mean is this document tells you how management is using the money from Operating Activities, or what they are doing in the absence thereof. Once I get past my criteria for P/E and Price/Book, this is the first place I will look to determine if management is good, or if they suck. That is a quick discriminator for me, and it tells me if a seemingly bad company is on a path to redemption with better management practices.

[rafaelbarbosa]

6 years later Sears goes out of business

[sycosindrum]

its crazy because looking back now; companies like Sears should've been easy to spot after reading the cash flow.

[vineetbansal]

Your videos helped me begin my investing career in the stock markets.

[TacoEqualsFtw]

7:53


"Investing in inventory" does not appear in the financing section of the CFS. Fluctuations in ending inventory are included in the Changes in Working Capital line in the Operating Section of the CFS. Clearly the negative investing cash flows are a result of PP&E expenditures.

[a.kartikeyanaarayanan]

Very well explained. Probably the best video I have seen on this topic.

[ossenaar]

Excellent education! One small observation. The Sears Holding Company example in the video shows updated, restarted and reclassified statements, all for the month of March 2012 so we can not conclude a multi year analysis/trend.

[potnudles]

that evil laugh before pulling up the kodak staement lolol @ 10:17

[Widdget]

Really great videos so far Preston! Loving all the info.
Just FYI- number #27 (this one) is out of order on the intermediate playlist. It comes after 25 but before 26!

[jona]

Thank you for this. I'm getting more and more comfortable with the subject of Cash Flow.

[vishalrajan]

Back when WMT stock was 68 bucks, thanks for the great vid still helps today!

[Value_Pilgrim]

Hi Preston, I am learning a lot while watching through your videos and can't thank you enough. The video previous to this(Lesson 26 / Video 15 in the playlist) appears to be deleted. Could you re-up it pls. or let us know what we are missing. Thanks in Advance.

[KaushikChoudhury]

Thanks again ... explained in very lucid way for people to understand

[duyenvu]

All your lectures are Thanks so much for making them for

[zakharenkoff]

2017...
WMT is up about 50% (if dividends are invested - compound interest)
SHLD is down 87%, no dividends were paid.

[semiemregocer]

Hello, Msn doesn’t seem to be showing 10 year summary anymore. Is that correct?

[alexshay]

This is a great lesson. Cash flow statement has been such a mystery to me, but now all this makes great sense. Do you have a lesson on Free Cash Flow?

[AnkushSharma-zvhv]

thank you so much for everything you are doing for the investor community