Cash flow from assets -


Ross et al.: Fundamentals I I. Overview of Corporate I 2. Financial Statements, of Corporate Finance, Sixth Finance Taxes, and Cash Flow

Edition, Alternate Edition

Dole had a cash flow from assets of -$181. Net income was positive at $79. Is the fact that cash flow from assets was negative a cause for alarm? Not necessarily. The cash flow here is negative primarily because of a large investment in fixed assets. If these are good investments, then the resulting negative cash flow is not a worry.

Cash Flow to Stockholders and Creditors We saw that Dole Cola had cash flow from assets of -$181. The fact that this is negative means that Dole raised more money in the form of new debt and equity than it paid out for the year. For example, suppose we know that Dole didn't sell any new equity for the year. What was cash flow to stockholders? To creditors?

Because it didn't raise any new equity, Dole's cash flow to stockholders is just equal to the cash dividend paid:

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