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).

RTO 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 Rentokil Initial plc (RTO), the free cash flow value is 435.40M.

All amounts in GBP

Operating Cash
563.2M
Capital Expenditure
-127.8M
Free Cash Flow
435.40M

Rentokil Initial plc has a positive 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).

RTO Cash Flow Statement History

Following table shows the history of Cash Flow Statements sheet for Rentokil Initial plc (LSE:RTO).

31 Dec 202131 Dec 202031 Dec 201931 Dec 2018
Net Income263.2M186.3M283.8M-98.3M
Depreciation275.5M275M286.4M192.1M
Change To Netincome-15.1M13.9M-109.9M257.5M
Change To Account Receivables58.7M-40.9M-38.2M-14.4M
Change To Liabilities-31.9M90.9M37.1M28M
Change To Inventory-3.2M-23.3M-3.6M-10.9M
Change To Operating Activities-4.8M-1.9M-6.3M-6.9M
Total Cash From Operating Activities563.2M523.4M462.9M363.6M
Capital Expenditures-127.8M-129.9M-140.1M-147.2M
Investments170.6M-170.5M-170.5M-170.5M
Other Cashflows From Investing Activities3.9M11.7M30.4M11.9M
Total Cashflows From Investing Activities-441.1M-497.5M-61.1M-456.8M
Dividends Paid-138.7M-138.7M-85.8M-74.2M
Net Borrowings-249.9M277.2M-124.5M-33.4M
Other Cashflows From Financing Activities-28.5M-23.7M-11M-8.1M
Total Cash From Financing Activities-417.1M253.5M-221.3M-115.7M
Effect Of Exchange Rate-13.9M-2.5M-7.5M5.7M
Change In Cash-308.9M276.9M173M-203.2M