Cash flow analysis

Name: TSIM SHEUNG YUE

Student ID: 1003763194
Pfizer Cash flow analysis (Based on the original consolidated statements of Cash Flows)
I. 1

Major sources of cash?

2014
- Operation

2013
- Operation

2012
- Operation

Proceeds from sales of

short term investment

Major uses of cash?

Purchase of short term

short term investment

investment
-

Purchase of long term

Purchase of short term

Purchase of long term

Proceeds from sales of

short term investment

Proceeds from sale of

business
Purchase of short term

investment

investment
3

Proceeds from sales of

investment
-

investment

Purchase of long term

investment

CFO compared to NI (> or <?)

- Financing activities
CFO > 0 and > NI

- Financing activities
CFO > 0 and < NI

- Financing activities
CFO > 0 and > NI

(List reasons)

Depreciation and
amortization

Other asset decrease

Gain on disposal of
discontinued operations

Other liabilities decrease

Depreciation and
amortization

Asset write-offs and

impairments

Deferred taxes from

CFO > Capital expenditure

CFO (16883) > CapEx

CFO (17684) > CapEx

discontinued operations
CFO (16746) > CapEx

(capex)?

(1199+384=1583)

(1206+259=1465)

(1327+259=1419)

Depreciation and

Depreciation and

Depreciation and amortization

amortization (5537) > CapEx

amortization (6410) > CapEx

(7655) > CapEx (1419)

(1583)
Yes

(1465)
Yes

Yes

CFO (16883) > CapEx

CFO (17684) > CapEx

CFO (16746) > CapEx (1419)

(1583) + Dividend paid

(1465) + Dividend paid

+ Dividend paid (6534) =

(6609) = 8192
Yes

(6580) = 8045
Yes

7953
Yes

Short-term and long-term

Short-term and long-term

Short-term and long-term

investment
NA

investment
NA

CFO > capex + dividend?

Excess cash invested? Where?

Sources of cash for dividend +

investment
NA

capex?
Other major items affecting

(Source) Proceeds from

(Source) Proceeds from sales

(Source) Proceeds from sales f

cash flows

sales f long term investment

f long term investment

long term investment

(use) Purchase of common

(use) Purchase of common

(use) Purchase of common

stock

stock

stock

(use) Principal payments on

(use) Principal payments on

(use) Principal payments on

long term debt

long term debt

long term debt

II.

Trends

Income

down

Up

Gain

10

CFO

Down

Up

Positive

11

Capex

CapEx (1583) Up

CapEx (1465) Up

CapEx (1419)

12

Dividends

6609 increase slightly

6580 increase slightly

6534

13

Net borrowing

Net borrower

Net borrower

Net repayer

13-10-1841+4491-

4323-4234+3475+6618-

7995-8177-300-1513+568=

2104+1002=1551
Almost all source, except

4146+1750=7786
Almost all use, except A/R,

-1427
Almost all use, except A/R,

other liabilities

A/P

A/P, other tax accounts

14

Working capital

Overall assessment:
The net operating cash flow of Pfizer was positive throughout 2012 to 2014 and the amount was ranged from 16.7 billion to 17.7
billion. The net operation cash flow increased to 17.7 billion in 2013 from 16.7 billion in 2012 and then decrease to 16.8 billion.
The cash used in investing activities was double to 10.5 billion in 2013, compared to that of 6.1 billion in 2012. The increase of the
cash used in investing activates is mainly contributed from the increase of the net purchase of investment in 2013 and proceeds from
sale of business in 2012. In 2014, the cash used for investing activities decreased from 9.4 billion to 4.2 billion and this is mainly due
to the decrease of the cash that used to purchase of short-term investments with original maturities of 90 days or less.
Overall, the net operating income was positive and consistent. In 2014, the inventory, other assets decreased significantly and this
trend may due to the slowdown of the sales. The net income dropped a lot in 2014 compared to 2012 and 2013.

The cash used for purchasing short-term investments increased continually from 2012 to 2014. This trend implied that Pfizer had the
conservative approach to investment activities and prefers short term investment to maintain its liquidity.
For the cash dividends paid, the amount of dividends increased slightly every year from 2012 to 2014. This indicated the company had
sufficient cash to pay dividend and this implied that the overall performance was positive throughout 2012 to 2014.
To conclude, the overall cash management of Pfizer is strong as its operating cash flow is sufficient to cover the capital expenditures
and to pay for the dividends. Also, Pfizer had the ability to borrow short term and long term loan from 2012 to 20141and this implied
that its creditability was strong.

ELI LILLY Cash flow analysis (Based on the original consolidated statements of Cash Flows)
I. 1

Major sources of

2014
Operation

cash?

Major uses of

Cash restricted for pending

2013
Operation

2012
Operation

Sales and maturities of noncurrent

Sales and maturities of noncurrent

investments

investments

Dividends paid

Dividends paid

cash?

acquisition

Purchases of noncurrent

Purchases of noncurrent

Dividends paid

investments ans short term

investments and short term

Purchases of noncurrent

investment

investment

investments and short term

3

CFO compared to

investment
CFO > 0 and > NI

CFO > 0 and > NI

CFO > 0 and > NI

NI (> or <?)

Depreciation and

Depreciation and amortization

Depreciation and amortization

amortization

Proceeds from terminations of

Income related to termination of

(List reasons)
-

Proceeds from terminations

of interest rate swaps

the exenatide collaboration with

Income related to termination

AMylin

Receivables decrease

of the exenatide collaboration

Other asset decrease

with Amylin

But

interest rate swaps

But

Inventories increase

Inventories increase

Account payable increase

Account payable increase

But
-

Inventories increase

Account payable increase

CFO > Capital

CFO (4367.1) > CapEx

CFO (5735) > CapEx

CFO (5304.85) > CapEx

expenditure

(1162.6+308.3+95=1565.9)

(1012.1+24.1+57.1= 1093.3)

(905+138.8=1043.8)

(capex)?

Dep and Amortization (1379) < Dep and Amortization (1445.6) >

Dep and Amort(1462.2) > CapEx

CFO > capex +

CapEx (1565.9)
Yes

(1043.8)
Yes

CapEx (1093.3)
Yes

dividend?

CFO (4367.1) > CapEx

CFO (5735) > CapEx (1093.3) +

CFO (5304.85) > CapEx (1043.8) +

(1565.9) + Dividend paid

Dividend paid (2120.7) = 3214

Dividend paid (2187.4) = 3231.2

Excess cash

(2101.2) = 3667.1
Yes

Yes

Yes

invested? Where?

Short-term and non current

Short-term and non current

Short-term and non current

Sources of cash

investment
NA

investment
NA

investment
NA

(Source) Sales of noncurrent

(Use )Purchase noncurrent

investment

investment

for dividend +
8

capex?
Other major items
affecting cash
flows

(Use) Cash restricted for

pending acquisition

(Source) Sales of

noncurrent investment
-

(Use )Purchase noncurrent

investment

(Use )Purchase noncurrent

investment

(Source) short term

borrowing

(Source) issue long term

debt

II.
9
10

Trends
Income
CFO

Down

Up

Gain

Down

Up

Positive

11

Capex

CapEx (1565.9) Down

CapEx (1093.3) Up

CapEx (1043.8)

12

Dividends

Down Slightly 2101.27M

Down Slightly 2120.7M

2187.4M

13

Net borrowing

Net borrower

Net borrower

Net repayer

14

Working capital

117.4-307.1+411.5-260.7=

-152.7-286.5+116.5-70.3 = -393

361.8-307.9+231-336.1=-51.2

-38.9

Overall assessment:
The net operating cash flow of ELI LILLY was positive from 2012 to 2014. The net operation cash flow increased to 5.7 billion in
2013 from 5.3 billion in 2012 and then decreased to 4.3 billion.
The cash used in investing activities dropped to 2.0 billion in 2013, compared to that of 2.8 billion in 2012. The decrease of the cash
used in investing activates was mainly contributed from the increase of proceeds from sales of noncurrent investments and disposals
of property and equipment in 2013. In 2014, the cash used for investing activities increased rapidly to 3.9 billion. The cash amount 5.4
billion for pending acquisition contributed to the increment of the net cash used in investing activities in 2014.
For the cash dividends paid, the amount of dividends was stable in 2012 to 2014. This implied that ELI LILLY had sufficient cash
flow for paying the dividends.
In 2012 and 2013, there was no net short term or long term borrowing but the company sold the property and equipment at the same
time. Especially the disposals of property and equipment increase dramatically to 179 million in 2013, compared to only 22 million in
2012. This implied that the companys ability for borrowing was weak in 2012 and 2013. However, it seems that the company retained
the creditability to borrow in 2014 as 2.6 billion of short term borrowing and 992 million of proceeds from issuance of long-term debt
were obtained to source the fund.
To conclude, the cash and cash equivalents of ELI LILLY improved gradually from 2012 to 2014. The net cash and cash equivalents

become positive in 2014 compared to -188 million and -1.9 billion in 2013 and 2012 respectively. ELI LILLY had a big impact in
2008 due to the $515 billion criminal fine for illegally promoting the drug Zyprexa, therefore it face a big challenge in the coming
year and needed to laid out a plan to rebuild the company. The company improved its performance and was recovering throughout
2009 to 2014. In 2014, ELI LILLY had been rebounded from its difficulty time and we may foresee that the company will continue to
grow and to achieve higher in the future.

Conclusion
Based on the analysis of the cash flow, both Pfizer and ELI LILLY performed well and could achieve positive net cash and cash
equivalents in 2014. For forecasting, Pfizer will keep growing steady due to its stable cash and cash equivalents while ELI LILLY will
have a strong momentum to grow after overcoming the difficult time from 2009 to 2014.