What Is Non-Operating Cash Flow?

Non-operating cash flow is a key metric in fundamental analysis that is comprised of cash inflows (that a company takes in) and cash outflows (that a company pays out), which are not related to a company's 澳洲幸运5开奖号码历史查询:operating activities. Instead, these sources and uses of cash are associated with a company's investing or financing activities. Non-operating cash flow shows up in a company's 澳洲幸运5开奖号码历史查询:cash flow statement.

Non-operating cash flow is important because it can help analysts, investors, and companies themselves to measure how effectively a firm manages its 澳洲幸运5开奖号码历史查询:free cash flow (FCF), how successful it is in investing its revenue or earnings, or to determine other essential indicators, such as a company's 澳洲幸运5开奖号码历史查询:cost of capital.

Understanding Non-Operating Cash Flow

Non-operating cash flow is comprised of the cash a company takes in and pays out that comes from sources other than its day-to-day operations. Examples of non-operating cash flow can include taking out a loan, 澳洲幸运5开奖号码历史查询:issuing new stock, and a 澳洲幸运5开奖号码历史查询:self-tender defense, among many o♈thers. Items listed under non-operating cash flow are usually non-recurring.

Non-operating cash flow appears on a company's cash flow statement and is usually broken into two sections: 澳洲幸运5开奖号码历史查询:cash flow from investing and 澳洲幸运5开奖号码历史查询:cash flow from financing.

Cash Flow From Investing

This section usually contains a company's 澳洲幸运5开奖号码历史查询:capital expenditures (CapEx), increases and decreases in investments, cash paid for 澳洲幸运5开奖号码历史查询:acquisitions, and cash proceeds from the sale of assets.

Cash Flow From Financing

This section usually contains proceeds from and payments made on 澳洲幸运5开奖号码历史查询:short-term borrowing and 澳洲幸运5开奖号码历史查询:long-term debt; and proceeds from equity issuance, 澳洲幸运5开奖号码历史查询:repurchase of common stock, or dividend payments.

Non-Operating Cash Flow in Action

Non-operating cash flow can demonstrate how a company uses its FCF—essentially, 澳洲幸运5开奖号码历史查询:operating cash flow less Ca💯pEx—or how it finances its invest🌊ing activities if it does not have any (or sufficient) free cash flow.

For example, suppose a company has generated operating cash flow of $6 billion in its 澳洲幸运5开奖号码历史查询:fiscal year and has made capital expenditures of $1 billion. It is left with substantial FCF of $5 billion. The company can then choose to use the $5 billion to make an acquisition (cash outflow). This would appear in the cash-flow-from-investing section. The company also could issue $2 billion of 澳洲幸运5开奖号码历史查询:common stock (cash inflow) and pay $2 billꦺ💝ion in dividends (cash outflow). Both of these would appear in the cash-flow-from-financing section.

Suppose, though, that the company's FCF is only $2 billion, and the company was already committed to acquiring another company for $1 billion (cash outflow). This would appear in the cash-flow-from-investing section. If the company also committed to paying $2 billion in dividends (cash outflow), it could borrow an additional $1 billion in long-term debt (cash inflow). Both of these would show up in the cash-flow-from-financing section.