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Help with 10-Q Interpretation
Posted on 1/29/14 at 10:24 pm
Posted on 1/29/14 at 10:24 pm
Here is a link to the 10-Q in question ( LINK)
Financial Statements --> Consolidated Statements of Income shows $42.7 MM growth in quarterly Operating Income from $56.7 MM last year to $99.4 MM this year, driven primarily by an increase in revenues.
Financial Statements --> Consolidated Statement of Cash Flows shows $5.7 MM growth in quarterly Net Cash Provided by Operating Activities from $102.2 MM last year to $107.9 MM this year.
So the surge in operating income to me is a major plus, and it seems more reflective of the big improvement in revenues. But mentally I can't reconcile why the statement of cash flows doesn't indicate a similar growth. There are a lot of differences between the two quarters in stuff like accounts receivables change, etc.
Which of the two is more meaningful? The goal of this exercise was to get a basic pulse of the core assets, without being obscured by the recent capital investments. But I am fairly new to analyzing financial statements and really learning as I go. Any comments?
Financial Statements --> Consolidated Statements of Income shows $42.7 MM growth in quarterly Operating Income from $56.7 MM last year to $99.4 MM this year, driven primarily by an increase in revenues.
Financial Statements --> Consolidated Statement of Cash Flows shows $5.7 MM growth in quarterly Net Cash Provided by Operating Activities from $102.2 MM last year to $107.9 MM this year.
So the surge in operating income to me is a major plus, and it seems more reflective of the big improvement in revenues. But mentally I can't reconcile why the statement of cash flows doesn't indicate a similar growth. There are a lot of differences between the two quarters in stuff like accounts receivables change, etc.
Which of the two is more meaningful? The goal of this exercise was to get a basic pulse of the core assets, without being obscured by the recent capital investments. But I am fairly new to analyzing financial statements and really learning as I go. Any comments?
Posted on 1/29/14 at 10:30 pm to Sigma_
They probably lessened their credit standards and increased the length the buyer has to pay back at coupled with growth.
ETA: it also looks like they pre paid a bunch of expenses.
ETA: it also looks like they pre paid a bunch of expenses.
This post was edited on 1/29/14 at 10:33 pm
Posted on 1/29/14 at 11:52 pm to Sigma_
quote:
Which of the two is more meaningful?
Profit is an opinion. Cash is a fact.
Posted on 1/30/14 at 11:31 am to Sigma_
It's never going to match up perfectly because (generally speaking) cash from operations is after interest and tax while operating income is before interest and tax. In any event, with this much difference, it looks like operating income includes a number of accruals, which could be (but doesn't have to be, particularly on a one quarter basis) indicative of poor earnings quality.
Posted on 1/30/14 at 10:53 pm to Sigma_
I am an auditor and I know I'm not really going out on a limb here, but Cash Flow info is more valuable IMO because it really shows the main vital signs of the company. I learned from a good manager early on that the cash flow statement has some of the most important info the investor can use. Not exactly info you haven't heard before I am sure, but analyze those cash flows brotha
Posted on 1/30/14 at 11:16 pm to Sigma_
Variance analysis on a single quarter's operating cash flows to the prior year's quarter is a bitch and doesn't yield a whole lot of useful information. It's a small time span and there's a lot of noise in the working capital accounts.
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