Explore our comprehensive Free Cash Flow Template for systematic financial analysis, comparative review, trend identification, and stakeholder communication.
1
Identify the company financial statements
2
Download or retrieve the income statement, balance sheet, and cash flow statement
3
Analyze and calculate net income
4
Determine depreciation and amortization expenses
5
Compute changes in net working capital
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Document investments in capital expenditures
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Calculate Total Cash Flow from Operations
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Identify any dividends or other cash provided by investing and financing activities
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Deduct capital expenditure, dividends and other investments or cash outflows
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Calculate the company’s free cash flow
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Approval: Financial Analyst Review
12
If necessary, adjust for changes related to inventory, accounts receivable, and accounts payable
13
Compare calculated free cash flow with prior years to track changes
14
Perform a comparative analysis with other companies
15
Identify trends or irregularities
16
Approval: Manager's Final Review
17
Prepare a detailed report with findings
18
Communicate free cash flow analysis results to stakeholders
19
Store the completed free cash flow template in the system properly
Identify the company financial statements
This task involves identifying the company's financial statements. Understanding the financial statements is crucial for conducting a free cash flow analysis. Identify the income statement, balance sheet, and cash flow statement to proceed with further analysis.
1
2019
2
2020
3
2021
Download or retrieve the income statement, balance sheet, and cash flow statement
Download or retrieve the company's income statement, balance sheet, and cash flow statement. These documents provide essential financial information to calculate free cash flow. Make sure to secure the latest version of these statements.
Analyze and calculate net income
In this task, analyze the income statement to calculate the company's net income. Net income is a crucial component in determining free cash flow as it represents the company's profit after deducting expenses and taxes. Calculate the net income based on the income statement figures.
Determine depreciation and amortization expenses
Identify and determine the depreciation and amortization expenses for the period. These expenses are essential in calculating free cash flow as they affect the cash flow from operations. Review the company's financial statements to identify the depreciation and amortization figures.
Compute changes in net working capital
Calculate the changes in net working capital for the period. Net working capital is the difference between current assets and current liabilities. Analyze the balance sheet to determine the changes in net working capital as it directly impacts free cash flow.
Document investments in capital expenditures
Document the investments made in capital expenditures during the period. Capital expenditures include investments in property, plant, and equipment. Review the company's financial statements and other relevant documentation to identify and document the capital expenditure figures.
Calculate Total Cash Flow from Operations
Calculate the Total Cash Flow from Operations using the indirect method. Cash Flow from Operations is a key component in determining free cash flow. Analyze the cash flow statement and make the necessary calculations to determine the Total Cash Flow from Operations.
Identify any dividends or other cash provided by investing and financing activities
Identify any dividends or other cash provided by investing and financing activities. Dividends and other cash inflows/outflows from investing and financing activities have an impact on free cash flow. Analyze the cash flow statement and financial statements to identify any relevant information.
Deduct capital expenditure, dividends and other investments or cash outflows
Deduct the capital expenditure, dividends, and other investments or cash outflows from the Total Cash Flow from Operations. These deductions are essential in calculating free cash flow. Use the information obtained from previous tasks to make the necessary deductions.
Calculate the company’s free cash flow
Calculate the company's free cash flow by subtracting the deductions from the Total Cash Flow from Operations. Free cash flow represents the cash available to the company after all expenses, investments, and financing activities. Use the information obtained from previous tasks to calculate the free cash flow.
Approval: Financial Analyst Review
Will be submitted for approval:
Calculate Total Cash Flow from Operations
Will be submitted
Identify any dividends or other cash provided by investing and financing activities
Will be submitted
Deduct capital expenditure, dividends and other investments or cash outflows
Will be submitted
If necessary, adjust for changes related to inventory, accounts receivable, and accounts payable
Analyze the balance sheet and other relevant information to identify any necessary adjustments related to inventory, accounts receivable, and accounts payable. These adjustments may be required to accurately calculate free cash flow. Make the necessary adjustments based on the information obtained.
Compare calculated free cash flow with prior years to track changes
Compare the calculated free cash flow with the free cash flow figures from previous years. This comparison helps in tracking changes in free cash flow over time. Analyze the historical data and identify any significant changes or trends.
Perform a comparative analysis with other companies
Perform a comparative analysis of the company's free cash flow with other companies in the industry. This analysis helps in understanding the company's performance relative to its competitors. Identify relevant companies and collect their free cash flow figures for comparison.
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Company A
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Company B
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Company C
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Company D
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Company E
Identify trends or irregularities
Analyze the free cash flow figures and identify any trends or irregularities. Look for consistent patterns or unexpected fluctuations in free cash flow. These trends and irregularities provide valuable insights into the company's financial performance.
Approval: Manager's Final Review
Prepare a detailed report with findings
Prepare a detailed report documenting the findings of the free cash flow analysis. The report should include the calculations, comparisons, and analysis conducted during the process. Use the collected information to create a comprehensive and insightful report.
Communicate free cash flow analysis results to stakeholders
Communicate the results of the free cash flow analysis to relevant stakeholders. This communication ensures that the findings and insights are shared with key individuals or teams within the organization. Determine the appropriate stakeholders and the most effective communication method.
Store the completed free cash flow template in the system properly
Store the completed free cash flow template in the designated system or repository. Proper storage ensures easy access to the template for future reference or reuse. Follow the organization's guidelines or SOPs for storing templates and documents.
