2 Basic questions regarding screener and cash flow statement

Q&A: Questions & Answers Investing Basics Q&A
1

I am a novice in stock market and while doing research , I got stuck in 2 basic questions(Here I am attaching a pic for better reference) -

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  1. The formula for working capital changes is receivables + inventory - Payables + Other WC items
    (we are looking at march 2021 results)

What is the meaning of + and - symbols in screener, as if we apply the above formula given by using the values mentioned in screener::::: Inventory(-849) + Receivables(-409) - Payables(1143) + other WC items(-92) then it doesnt equal to working capital changes(-206) as (-849) + (-409) - (1143) + (-92) = -2493 and not -206

Please help where am I getting it wrong .

  1. Payables is the money that is owed by the company. If we look at march 2023 results than payables are in -ve . Does it means that company has payed for raw materials or other such items in advance ?

Your answer to these questions will be very helpful .

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Pls post this to Screener.in: The destination for Intelligent Screening & Reporting in India

As per forum guidelines this cannot be a new post

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For this you will need to understand cashflow statement definition. the receivable, payable and inventories you see in cashflow st is not actual receivable, payable or inventories, these are the delta (changes) compared to last year values. think in this way - last year you had 800 rs of payable, 600 rs of receivable and 500 rs of inventory and this year have 1000 rs of payable, 900 rs of receivable and 600 rs of inventories. So now think how much of your cash has been spent in these items compared to last year. it is
payable - now you have to pay more that means you got some money in the form of payable so it rs 1000 - 800 = 200 +ve
receivable - receivable increased from 600 to 900 that means money has gone out from your pocket to market so it is -300 changes
inventories increased from 500 to 600 that means you have spent additional 100 in inventory so moeny spent on that is -100
so how much is overall addition money you have spent on these items in this year compared to last year is 200-300-100 = -200 that means overall 200 rs of cash from your profit has gone into working capital changes. cashflow statement is about where is the cash (Profit) going. Overall + cashflow means companies is realizing its profit in terms of cash. -ve cashflow means company is making profit but is not converting profit into cash.

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Thanks for telling but I got the answer here , will ask future questions there

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Thanks for the explanation . I didn’t knew that these were delta values .
But had one more doubt

Here you have done year 2 - year 1

While here year 1 - year 2

Any specific reason for this

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by theory any cash goes out needs to be subtracted from profit because the money you earned in profit is being spent there. And cash coming-in needs to be added in the profit cause thats the money you are getting. when you think this way - all will make sense. but if it is confusing then payable in cash flow should be current year - previous year because if payable increased current year then it has to be positive because you have extra money which you would have otherwise paid to your vendors who supplied sth to you, and receivable, inventory should previous year - current year, because if inventory increased that means you spend extra money for increased inventory which in above example is Rs 100. he Rs 100 cash was spent on increasing the inventory from Rs 500 to Rs 600, therefore in order to make it -ve in cash you need to do last year -current year.

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Thanks for explaining :slight_smile:. This topic was eating me since many days .
To sum it up -

  1. When we look at the cash flow statement in the screener , what we are looking at are delta values
  2. Payables change = recent year - previous year
  3. Receiveables and inventory change = previous year - current year
  4. If payables is +ve means company is purchasing more raw materials etc. on credit than previous year (good sign)
  5. If receiveables is +ve means co. is giving less material on credit(again good sign)
  6. If inventory is +ve means co. is decreasing its inventory(also good sign)

Also are there any other values that are depicted in change rather than actual values

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We already have a couple of threads on screener. So move content there. This thread is locked and will be deleted in due course.