If it's like to i'd like to eat
Introduce cash and statements of cash flows
You remember that
Did i show you this
Somewhat
Sketchy diagram
In the diagram talked about cash flow and investments
Cash flow from operations
In cash flows from financing the change the cash balance for the
The beginning of the year to a cash balance at the end of the year know what i'd like to do is to
Go into an actual company the company that i'd like to look at
Is alibaba group
Alibaba is the largest online and mobile commerce company in the world
Edit as
U.s. dollars
5.5 billion annual revenue
At about 1.3 billion
Annual net income after-tax
Tax
As you remember from the diagram operating
Cash flow is different from operating income and it's different from operating income
Because of
Rules and because of the change in
Net working capital
You remember that net working capital is non-cash short-term assets
-9 debt
Short-term liabilities
So going to alabama this is the consolidated statement of cash flows net income for
Alibaba
Into
2003
13 way
8.6 bill
Johanna jimmy b
Get the cash flow from operations for the much-larger for
14.47
Billy and jimmy b
Let's look at a few of the items that caused this difference
What item is this
Sharebeast
Compensation expense
This compensation ex
Spence was recognized as part of payroll and payment
To outside control
Elephants
Georgia. expense but
Washing paint with cash it was paid with
Shares of the company
So these were expensive
That did not result in a period expenditure cash but
The clearly they were the giving of value
Netflix down at
Two other large items
We have
Receivables these are nascar receivables and lonely symbols and then following that we have some prepayments
So these are prepayment
Buy alibaba to its suppliers and
These are increases in short-term assets and so of course
The result in a reduction of cash flow from operations
But net working capital requirement also included in on
Peebles and as you can see there a two large increases in non-debt payables
This is accrued expenses accounts payable and liabilities
Convergence deposits so these are deposits of merchants and their customers of alibaba
As you can see these 2 items
In total
Far exceed
The increase in shore
Short-term non-cash assets the net effect is that the net cash provided
Provided by operating activities
Is considerably larger than the net income of alibaba
In addition
Net operating cash flow
There are two other major can
Is a change in
Cash
Can one is it
Investment
The other is fine
Training first time
Cash flows for
Tiffany's
The investing activities of alibaba in
Two thousand and
The 13
Is largely acquisition
Of land use right
How to properly plant in a
Equipment
These 2 items
Cash outflow
World finance in largely
Decreases in
Term investments
Saudi investing app
Work
Actually so
Financing
With a little bit of
Cash left over
Turning to the third area
Cash flows from
Activities
In 2013
There was a tremendous amount of activity in
Factor with a major restructuring of
Alibaba
The capital structure
If you
Issuance
Of equity shares
Every purchase of or
Ordinary shares
Issuance of convey
Convertible shares
The repurchase of the equity of alibaba.com
And there was
Little activity
Bank borrowings
But the net effect was
Relatively small
Cash flow
From financing app
Cavities
-1.
Ford
Billion
Meb
So the total
Cash flow
For the toad
Little cash flow to alibaba
For the entire period witch
13.5 bill
Billion chevy
You add that to
Beginning of the period to
Total cash back
Icash stock
At the end of 2003
Of 30.
.396
Gillian james
Canada ali baba's managerial balance sheet
Three things are striking especially if you look at the common size balance sheet
The common size balance sheet
Is simply thai
Taking the manager of balance sheet
When dividing each item by total assets this gives you 4
Each item
A percentage of total assets and
That allows comparison
Cross years
In between different companies
Three things are striking
First of all the rearrangement of financing
2000 + 12 - 2000 +
13
You can see the equity dropped from 96% of financing down
Down to 38%
Short-term debt increase
Reese's
And long-term debt come from
02
50% secondly working capital requirement is negative
Financing of alibaba's operating activities
We're not dead
Pitbulls
Exede
John cash receivables and inventories
Is a part of
The company's model
And it's
Relatively permanent
An increasing
And thirdly alibaba has very large cash balances it has 30
32.6
860
Billion jeep
4 / 5 billion
$5
Clearly that 32 billion
Jimmy b
It's not a single checking account
It doesn't have different check
Checking accounts in c
Savings accounts in many different currencies in differ
Different locations in
China and throughout entire world it includes time deposits in me even included how their money market invest
Cash
Free or may not be readily available from one account in one country to another currency
The corporate treasurer have to worry about whether he or she has enough cash she has to worry about where that cashes in the rye
Bright account the right time to
To effect payment
The need for cash increases with
The volatility of operating cash flows and
An investment opportunities
The bank may allow you to draw lines of credit
Increases a company's liquidity
A line of credit would be as good as cash
If the bank would always lend you money whenever you want it
If the bank of a hundred percent creditworthy show when the bank wants lend you money
The bank has the medical and you and
Will lend you the money
And if it cost of borrowing it sufficiently low
But such lines of credit
Are actually quite rare
To hold in cash is essential for
Farm survival
But it's expensive
An amazing that 73% of alibaba's managerial balance sheet assets are in cash over that
73% is
Is partly a function of the way that we've treated at net working capital require
Even if we treat that networking can
Capital requirement
Save the merchants
Harvey d part of
Of the investors
And that 8.4
4 billion chimneys
Should we be counted as in
Investment not
Not as a negative power
Of working capital
Acquirement we still find
61%
Are the balance sheet is
Jason cash
For toyota motor corporation
The number was
11
12% of
Manager of balance sheet
Does that make
Alibaba better than the toyota motor corporation.
Not really
Company with a big pile of cash
Without you
A comparative advantage
In making short-term
Liquid investments
Is not maximizing invest