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Cash Flow Analysis 2: YOKU

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cash_4 September 8, 2014 (Chinavestor) Having completed cash flows from operating and investing for Youku Tudou Inc. (NYSE:YOKU), it is time to move over to see cash from financing for the company.Besides cash from financing, we are going to see free cash flows for YOKU to give investors a complete picture. After cash flow analysis, we are going to see the balance sheet and reveal our findings in the next few days. Financing Cash Flow:

Yoku_ZS_cashF1

From the above table, financing cash flow takes only a small proportion of overall cash flows, with operating cash flow improving, it might send a positive signal to the overall performance of the company cash flows.

Yoku_ZS_cashF2

The above table is extracted from Youku Tudou’s 2010, 2011, 2012 & 2013 annual report. We can see that cash flow from financing activities has been decreasing since 2012. For 2012 and 2013, financing cash flow mainly comes from exercise of employee stock options. Yet for the previous two years, the 2010 IPO at NYSE and 2011 second offering have injected huge amount of capital to the company business.


Free Cash Flow:

Yoku_ZS_cashF3

Figure 7

Free Cash Flow has been improving since 2013Q1; yet most of the time it is negative. This is due to operating cash flow being unable to cover capital expenditure. However, if these investments earn a high return, the strategy has the potential to pay off in the long run. It’s good to see FCF’s improving trend, and it’s hitting positive in 2014Q1. But we are watching the trend over longer time horizon to see the future return on investments before giving a “buy” suggestion to Yoku (NYSE:YOKU) stock.



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