Cash flow is the net amount of cash and cash-equivalents being transferred into and out of a business. At the most fundamental level, a company’s ability to create value for shareholders is determined by its ability to generate positive cash flows, or more specifically, maximize long-term free cash flow (FCF).

ARR Free Cash Flow Analysis

Free cash flow, a measure commonly used by analysts to assess a company's profitability, represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.

The Free Cash Flow is calculated using a number of methods including using Operating Cash Flow. Following is the formula to calculate Free Cash Flow based on Operating Cash Flow.

Free Cash Flow = Operating Cash Flow - Capital Expenditures

Using above formula to calculate Free Cash Flow for American Rare Earths Limited (ARR), the free cash flow value is -1.63M.

All amounts in AUD

Operating Cash
-964.9k
Capital Expenditure
-660.54k
Free Cash Flow
-1.63M

American Rare Earths Limited has a negative free cash flow as per the latest annual Cash flow statement released by the company. Positive free cash flow is cruscial for the financial health of a company, which can be used to pay dividends, expand operations, and deleverage its balance sheet (i.e., reduce debt).

ARR Cash Flow Statement History

Following table shows the history of Cash Flow Statements sheet for American Rare Earths Limited (ASX:ARR).

30 Jun 202030 Jun 201930 Jun 201830 Jun 2017
Net Income923.29k-1.36M-1.52M885.98k
Depreciation639.08k1.3k41321.6k
Change To Netincome-2.68M96.09k168.14k-1.99M
Change To Account Receivables47247249.77k-44.62k
Change To Liabilities128.98k-97.11k-505.33k588.92k
Change To Operating Activities19.95k71.67k310.03k-381.09k
Total Cash From Operating Activities-964.9k-1.29M-1.68M-918.8k
Capital Expenditures-660.54k-314.03k-5.62k-5.62k
Total Cashflows From Investing Activities-160.54k-314.03k2.96M-335.45k
Net Borrowings-62.07k-62.07k-62.07k-62.07k
Other Cashflows From Financing Activities-149.99k-149.99k-149.99k-33.87k
Total Cash From Financing Activities2.1M2.1M8.8k665.31k
Effect Of Exchange Rate-31.78k-31.78k-31.78k-31.78k
Change In Cash943.27k-1.6M1.29M-588.94k
Issuance Of Stock2.31M2.31M8.8k857.12k