Cash flows question?

Question

How can a company record negative cash flows from operating activies for three quarters yet repot a net postive cash flow at the end of the fiscal year?

Answer 1

FUZZY MATH

Answer 2

There are 3 parts to the cash flow statement, cash flows from operations, investing, and financing. Usually when a company has negative cash flow from operations, they make up for it by generating positive cash flows from financing. Cash flows from financing can come from the sale of stock or from bank loans. All this means is that the company is supporting operations with debt or shareholder money. This is typical in start-up companies. If this isn't a start up company, it may be a bad sign.

Answer 3

Aside from having nothing to sell for those three quarters, then having great sales for the 4th Q, it's possible to have great investments that are non-operating earnings, heavy depreciating assets or the sales of assets.

Operating income is different from "other activities". I can easily operate a company that sells nothing but still have a positive cash flow at the end of the year.

Answer 4

cash flow is purely from revenue...it isnt necessarily profit. Think of a convenience store gas station. They take in alot of money on a daily basis (high cash flow). This doesnt mean that they get to keep it all because they have alot of bills too... (ex. gas, cost of goods, wages, insurance, taxes etc. ) Profit flow is the money left over at the end of the day.

Answer 5

Q1 = -$1.00
Q2 = -$1.50
Q3 = -$0.50
Q4 = +$5.00

Net positive cash flow for the year is $2.00

Answer 6

Is it a retail business? a lot of retail businesses only do well in the fourth quarter.