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).

SN 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 Smith & Nephew plc (SN), the free cash flow value is 469.00M.

All amounts in USD

Operating Cash
877M
Capital Expenditure
-408M
Free Cash Flow
469.00M

Smith & Nephew 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).

SN Cash Flow Statement History

Following table shows the history of Cash Flow Statements sheet for Smith & Nephew plc (LSE:SN).

31 Dec 202131 Dec 202031 Dec 201931 Dec 2018
Net Income524M448M600M663M
Depreciation522M501M496M427M
Change To Netincome-61M-120M49M65M
Change To Account Receivables-81M209M30M-108M
Change To Liabilities82M-103M201M71M
Change To Inventory-151M-45M-204M-152M
Total Cash From Operating Activities877M935M1.17B931M
Capital Expenditures-408M-443M-408M-347M
Investments2M7M26M-2M
Total Cashflows From Investing Activities-691M-606M-1.25B-378M
Dividends Paid-329M-328M-318M-321M
Net Borrowings-326M1.49B379M-7M
Other Cashflows From Financing Activities-4M7M-2M-8M
Total Cash From Financing Activities-645M1.16B7M-371M
Effect Of Exchange Rate-7M1M1M-4M
Change In Cash-466M1.49B-76M178M
Issuance Of Stock14M11M11M13M