Part 4 -Fundamentals Aren’t Just Numbers: They’re the Keys to Winning the Stock Game
A Look at the Metrics That Drive Company Share Prices Up (or Down)
A warm hello to all new readers! I’m glad you are on board.
New here? I’m Michael and the founder of TheValueVantage.com and on a mission to make beating the stock market as easy for you as choosing your favorite ice cream. If you had invested along, you would have gained more than 50% in the past 12 months. Take a look at the Return-Simulator on my website. How it all started.
Understanding beats gambling.
The Cash Flow Statement - Part 2
Here’s the last set of cash flow fundamentals. These are the nuts and bolts of how companies manage, generate, and allocate cash. Let’s break them down simply and explain why they matter.
31. Investment Acquisitions & Disposals
This shows the cash used for or gained from buying and selling investments—things like securities or loans.
Why does this matter?
It tells you whether the company is reinvesting or pulling out of external assets. This can signal how focused they are on growth or liquidity. Compare it to the 35. Net Cash Flow from Operations.
32. Net Cash Flow from Financing
This tracks cash from raising money (like issuing debt or stock) and spending it (like paying dividends or repaying debt).
Why does this matter?
It shows how the company funds itself. Are they borrowing too much? Paying off debt? These answers live here.
33. Issuance or Repayment of Equity
When a company issues new shares, it gets cash (inflow). When it buys shares back, cash goes out.
Why does this matter?
Issuing shares can dilute ownership—bad for shareholders. Buybacks? Often a sign of financial strength and shareholder focus.
34. Effect of Exchange Rate Changes on Cash
Currency exchange rates can inflate or shrink the company’s cash balance, especially if they operate globally.
Why does this matter?
For multinational firms, exchange rate swings can create surprises. It’s worth tracking if they’re earning or losing on currency changes.
35. Net Cash Flow from Operations
Cash generated from the core business—selling goods or services.
Why does this matter?
This is the ultimate test of a company’s sustainability. If operations aren’t producing cash, there’s a problem.
36. Shared-based Compensation
Non-cash expenses for stock-based employee benefits.
Why does this matter?
It’s a cost on paper but doesn’t reduce cash. Adding it back in cash flow helps show the true cash position.
37. Business Acquisitions & Disposals
Cash used or gained from buying or selling parts of the business—think mergers, joint ventures, or divestitures.
Why does this matter?
This also shows the company’s strategy. Are they expanding into new markets or scaling back to focus?
38. Depreciation, Amortization & Accretion
Accounting for wear and tear on assets and other non-cash charges.
Why does this matter?
It doesn’t drain cash but affects profitability. Adding it back helps clarify real cash flow.
39. Net Cash Flow to Change in Cash & Cash Equivalents
The final truth of how much cash went in or out during the period.
Why does this matter?
This is the big picture. Is the company’s overall cash position growing or shrinking? It’s the bottom line of cash flow.
40. Net Cash Flow from Investing
Cash spent on or gained from buying or selling long-term assets like property or equipment.
Why does this matter?
Negative cash flow here often means investment in growth. Positive? Could mean they’re selling off assets or scaling back.
That’s a wrap.
Each of these cash flow metrics points to another specific piece of the big puzzle – as there are many ways in which money flows in and out of the company. Together, they can help you spot possible trends: Is the company growing? Over-leveraged? Operating efficiently? When you understand these numbers, you don’t just see the story—they help you anticipate the next possible chapter.
Next week we will talk about the Income Statement.
What I did
I continued to work with RTOS (real-time operating systems). The course I started is almost complete. There are many tricky tripwires. Every detail counts, otherwise the code behaves like a little stubborn child.
What's On My Mind
I went to the memorial meeting, and it was a mix of emotions—sadness, yes, but also something deeply uplifting. You can know someone for years, but seeing the wider impact they had on others? That hits differently. At the funeral, they played a 45-minute video of people talking about how Eyal had touched their lives. A reminder of how much one person can mean to so many.
I had the chance to speak at the event. I wanted to share more than just the professional side of Eyal—more than his accomplishments or the projects we worked on. He was a very good friend, and therefore I wanted people to see the whole picture: the quirks, the warmth, and the way he made everyone feel around him.
This is what I said:
When I first met Eyal, I never imagined we'd end up creating our own secret language. We used it everywhere - tough negotiations, startup visits, and endless meetings. You might wonder why? Oh, there were many reasons. Who plays good cop, who plays bad cop. Who needs to take over when the other is stuck. Or simply when a meeting was boring and had lost its last drop of purpose.
What started as two colleagues turned into a friendship that felt like finding the brother I never knew I needed. Eyal had many sides to him - brilliant negotiator with one of the messiest cars I've ever seen - but his real magic was his way with people. I watched him turn chaos into clarity countless times... well, except for the chaos in his car. But he had this special gift - walking into a room full of conflicting opinions and somehow getting everyone to leave feeling understood and happy.
The more I got to know Eyal, the more I realized how much of who he was, came from his family. To his parents - he told me so much about you that I feel like I know you. You raised someone extraordinary, and for that, I - no - we all - thank you.
People say we don't remember what someone did or how much he worked, but how they made us feel. Eyal made everyone feel special. He wasn't about competition - he was about building bridges, fostering friendships, and living with no regrets. That last part was more than just words to him - it was how he lived, right down to name of his last little startup 'No Regrets.'
That's how I'll remember him - the friend who showed me that success isn't about competition, but about the lives you touch along the way.
Nuggets
Yes, I’m still listening to Why Nations Fail.
Take care,
Michael
Hit the heart if you want a life with purpose :-D
Disclaimer:
The information in this article is my personal opinion. I’m not a certified investment professional. It is not consulting, nor does it constitute investment recommendations.
I do my research carefully and follow my personal investment strategy.
The stock market is a complex building with its own rules. There are no rules set in stone, like the rules of physics.
Therefore, use the contents of this newsletter at your own risk and do your own research as well. Investing in the stock market can lead to a total loss of the capital invested.
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