Best real examples of cash flow statement analysis examples

Real-world examples of cash flow statement analysis examples

Let’s start where investors actually start: with patterns in the cash flow statement that tell a story. Below are real-style examples of cash flow statement analysis examples inspired by how analysts review public company filings and private company reports.

Example 1: Profits up, cash down – the classic red flag

Imagine a mid-size retailer reporting the following for 2024:

• Net income: \(40 million (up from \)30 million in 2023)
• Cash flow from operating activities (CFO): \(5 million (down from \)35 million)
• Inventory increase: $30 million
• Accounts receivable increase: $10 million

On the income statement, the business looks great. But the cash flow statement tells a very different story.

When you walk through this example of cash flow statement analysis, you’d say:

• Earnings growth is being funded by working capital. The company is tying up cash in inventory and receivables.
• The gap between net income (\(40m) and CFO (\)5m) is too wide to ignore.
• If this pattern persists, the retailer may need more debt or equity just to stay liquid.

This is one of the best examples of why cash flow statement analysis matters more than just looking at net income. It shows a business that is technically profitable but increasingly cash‑hungry.

Example 2: SaaS company with negative earnings but strong operating cash

Now look at a fast‑growing SaaS company in 2025:

• Net income: –$15 million
• Depreciation & amortization: $20 million
• Stock‑based compensation: $25 million
• Change in deferred revenue: +$10 million
• Cash flow from operations: +$35 million

At first glance, the income statement screams “loss‑making startup.” But when you run through this example of cash flow statement analysis, the picture flips:

• Non‑cash expenses (D&A and stock comp) are large relative to the loss.
• Deferred revenue is rising, meaning customers are paying before services are fully delivered.
• CFO of +$35m suggests the core business is cash generative, despite accounting losses.

Investors often accept negative net income for SaaS names if they see strong and growing operating cash flow. This is one of the real examples that explains why many high‑growth tech companies trade at high valuations even while reporting GAAP losses.

For a deeper dive into how investors interpret cash flow data, the U.S. Securities and Exchange Commission (SEC) provides educational material on financial reporting and cash flow statements at https://www.investor.gov

Example 3: Manufacturing company funding growth with heavy capex

Consider a manufacturing firm expanding capacity in 2024–2025:

• Cash flow from operations: $120 million
• Capital expenditures (capex): –$180 million
• Free cash flow (FCF): –$60 million
• New long‑term debt raised: $80 million
• Dividends paid: $10 million

Here, operating cash flow is strong, but investing cash flow is deeply negative due to new plants and equipment. When you use this as one of your examples of cash flow statement analysis examples, the key questions become:

• Is capex growth or just maintenance? The scale (180m vs 120m CFO) suggests expansion.
• How is the gap funded? Mostly by new debt (+$80m), with some FCF shortfall.
• Is the dividend sensible? Paying \(10m in dividends while borrowing \)80m for expansion is common, but it raises questions about capital allocation.

If the new capacity delivers higher CFO over the next few years, this negative free cash flow period could be a rational investment phase. If not, it becomes a textbook example of over‑expansion.

Example 4: Retailer using working capital to manufacture short‑term cash

Another one of the best examples of cash flow statement analysis examples involves working capital management.

Suppose a retailer in 2024 reports:

• Net income: $15 million
• Cash flow from operations: $40 million
• Inventory change: –$20 million (inventory reduced)
• Accounts payable change: +$10 million (paying suppliers later)

On paper, CFO is far higher than net income. When you analyze this example:

• The retailer is selling down inventory, which releases cash. That’s fine in the short term but unsustainable if it cuts into future sales capacity.
• Stretching payables boosts cash temporarily but can strain supplier relationships.
• If this pattern repeats for several quarters, you’d ask whether management is optimizing or simply pulling cash forward to dress up the numbers.

This is a real‑world pattern often seen before liquidity problems or covenant breaches. The cash flow statement shows the tactic long before the income statement looks stressed.

Example 5: Mature dividend payer with stable, boring cash flows

Not all examples of cash flow statement analysis examples are dramatic. Some are almost boring—and that’s often attractive.

Picture a large consumer staples company in 2025:

• Cash flow from operations: $8.5 billion (steady for 3 years)
• Capital expenditures: –$2.0 billion
• Free cash flow: $6.5 billion
• Dividends: $4.0 billion
• Share repurchases: $1.5 billion

Here’s how an analyst would interpret this example:

• CFO is stable and comfortably covers capex and shareholder returns.
• Free cash flow payout (dividends + buybacks) is about 85% of FCF, leaving some buffer.
• Limited investing cash outflows beyond capex suggest the business is mature, with few big expansion projects.

This type of pattern appeals to income investors looking for reliability. The cash flow statement confirms that the dividend is not being funded by debt or asset sales.

For background on how analysts think about free cash flow and capital allocation, you can review corporate finance teaching material from universities such as MIT OpenCourseWare: https://ocw.mit.edu

Example 6: Early‑stage startup with repeated financing reliance

Now consider a 2024–2025 early‑stage startup:

• Cash flow from operations: –$12 million
• Cash flow from investing: –$1 million (mostly software and small equipment)
• Cash flow from financing: +$15 million (new equity raised)
• Ending cash balance: $5 million

In this example of cash flow statement analysis, you’re not shocked by negative operating cash—it’s a startup. But you look for:

• Runway: With –\(12m annual operating cash burn and \)5m ending cash, the company has less than 6 months of runway unless it cuts burn or raises again.
• Trend: Is operating cash flow improving or getting worse year over year?
• Financing mix: Is the company relying on equity, convertible notes, or bank debt? Equity gives more flexibility; debt can be dangerous with no cash generation.

For startup investors, the cash flow statement is a reality check on the pitch deck. It reveals whether the “18–24 months of runway” claim is real.

Example 7: Company with big one‑time cash inflow masking weak operations

Here’s another of those real examples of cash flow statement analysis examples you see in mature industries.

Assume a telecom company in 2024:

• Cash flow from operations: $900 million
• Gain on sale of assets (non‑cash in income, but cash in investing): $600 million
• Cash flow from investing: +$450 million (after subtracting capex)
• Cash flow from financing: –$1.1 billion (debt repayment and dividends)

The headline is that total cash increased slightly. But when you break down the cash flow statement:

• Core CFO of $900m is flat or declining compared to prior years.
• The positive investing cash flow is driven by asset sales, not by lower capex.
• Financing outflows (dividends + debt repayment) are being partially supported by selling assets.

This is a classic warning sign. You don’t want long‑term shareholder returns funded by one‑off disposals. A careful reader sees that the business is slowly shrinking its asset base to maintain payouts.

Example 8: Rising interest rates and the financing section in 2024–2025

One of the most important 2024–2025 trends for cash flow statement analysis is the impact of higher interest rates. After years of cheap money, companies now face higher borrowing costs.

Here’s how that shows up in examples of cash flow statement analysis examples in recent filings:

• Higher interest payments reduce CFO, especially for highly leveraged companies.
• Some firms show net debt repayment in the financing section as they try to de‑risk their balance sheets.
• Others show increased equity issuance (dilution) because new debt has become more expensive.

When you review a company’s cash flow statement in this environment, you look for:

• Whether CFO still covers interest, capex, and dividends with a margin of safety.
• Whether the company is rolling over debt at higher rates, visible in rising interest paid.
• Whether management is shifting from debt to equity financing, visible in the financing section.

For macro context on interest rates and their impact on business borrowing, the Federal Reserve’s education resources at https://www.federalreserve.gov/education.htm are a helpful reference.

How to read these examples of cash flow statement analysis examples

The point of walking through these real examples is not to memorize numbers, but to train your eye to see patterns. When you pick up any cash flow statement, you can structure your thinking around a few core questions:

1. Is operating cash flow aligned with earnings?

If net income and CFO move in the same direction over time, that’s usually a good sign. Large, persistent gaps deserve attention.

Patterns that stand out in the examples above:

• Retailer (Example 1): Net income up, CFO collapsing due to inventory and receivables. That’s a liquidity warning.
• SaaS company (Example 2): Net loss but strong CFO due to non‑cash charges and deferred revenue. That’s more acceptable.

When you see a pattern that looks like one of these examples of cash flow statement analysis examples, you immediately know whether to be concerned or cautiously optimistic.

2. Is investing cash flow building the future or patching the present?

Investing cash flows can be negative for good or bad reasons.

From the examples:

• Manufacturing company (Example 3): Heavy capex funded by debt can be smart if it raises future CFO.
• Telecom (Example 7): Positive investing cash flow from asset sales is a warning if it’s used to fund dividends.

The same dollar amount can have opposite meanings depending on context. That’s why real examples matter more than formulas.

3. How is the company really being funded?

The financing section shows you who is footing the bill: lenders, shareholders, or internal cash generation.

In these examples of cash flow statement analysis examples:

• Startup (Example 6): Equity investors are funding negative operating cash.
• Mature dividend payer (Example 5): Operations fund both capex and shareholder returns, with limited need for new debt.
• Rate‑sensitive firms (Example 8): Some reduce debt as rates rise; others issue equity or roll over loans at higher cost.

If a business keeps returning cash to shareholders while borrowing more each year, you need to ask whether that is sustainable.

4. What do the trends look like over 3–5 years?

Any single year can be noisy. The best examples of cash flow statement analysis examples look at multi‑year patterns.

Things to track across years:

• Direction and stability of CFO
• Ratio of capex to CFO (is capex eating the whole pie?)
• Free cash flow coverage of dividends and buybacks
• Reliance on new debt or equity to fill gaps

Many investors download several years of cash flow data from EDGAR or financial databases and build simple time‑series charts. That’s how you see whether Example 3 turns into a success story or an over‑leveraged mess.

For students and self‑learners, corporate finance and financial statement analysis courses from universities like the University of Michigan and others on platforms linked via https://www.edx.org can help you practice with more real examples.

FAQ: examples of cash flow statement analysis examples

Q1: What are some simple examples of cash flow statement analysis for beginners?
A straightforward example of cash flow statement analysis is comparing net income to cash flow from operations. If a company reports \(10 million of net income but only \)1 million of operating cash flow, you’d investigate working capital changes and non‑cash items to see why cash is lagging. Another simple example is checking whether free cash flow (CFO minus capex) is positive and stable over time.

Q2: Can negative cash flow from investing be a good sign?
Yes. Many of the best examples of cash flow statement analysis examples involve negative investing cash flows from growth investments—new plants, software development, acquisitions, or R&D facilities. The key is whether those investments eventually show up as higher operating cash flow. Negative investing cash flow is more concerning when it comes from asset sales drying up or from repeated write‑offs.

Q3: What is an example of a red flag in the cash flow statement?
A classic red flag example of cash flow statement analysis is when net income rises while operating cash flow falls for several years in a row. Often, this comes with big increases in receivables or inventory. Another red flag is when dividends and buybacks consistently exceed free cash flow, forcing the company to borrow or sell assets to fund shareholder payouts.

Q4: How do higher interest rates affect cash flow statement analysis?
In a higher‑rate environment like 2024–2025, you’ll see larger interest payments reducing operating cash flow and sometimes higher net debt repayments in the financing section. When reviewing examples of cash flow statement analysis examples from recent years, you want to see whether a company can still cover interest, capex, and dividends without recurring external financing.

Q5: Where can I find real examples of cash flow statement analysis from public companies?
You can download actual cash flow statements from the SEC’s EDGAR database and practice your own analysis. Many universities and finance programs also publish case studies that walk through example of cash flow statement analysis step by step. Combining those real examples with the patterns discussed here will sharpen your judgment quickly.