The Net Cash Provided By Operating Activities is a financial metric that shows how much cash a company generates from its regular business operations. It is calculated by adjusting net income for non-cash items and changes in working capital.
The Net Cash Provided By Operating Activities is a key section in the company's cash flow statement. It provides insight into a company's ability to cover its operational costs and debts, invest in its business, and return value to shareholders.
This metric considers non-cash expenses, such as depreciation and amortization, which are added back to net income. Changes in working capital, such as accounts receivable, inventory, and accounts payable, also influence this value. If these assets or liabilities increase, cash decreases, and vice versa.
While this measure provides valuable insight into a company's financial health, it should not be used in isolation. It is also important to consider a company's investing and financing activities.
For Procter & Gamble, the net cash provided by operating activities is calculated by adjusting its net income with depreciation and amortization, changes in inventory, accounts receivable, and accounts payable, and other non-cash items.
Amazon's net cash provided by operating activities is derived by adjusting its net income for depreciation of property and equipment, stock-based compensation, changes in working capital items like inventory, accounts receivable, and accounts payable.
For Exxon Mobil, the net cash provided by operating activities is calculated by adjusting its net income with depreciation and depletion, deferred income taxes, changes in working capital items like accounts receivable, inventory, and accounts payable, and other non-cash items like exploration expenses.