Question

Please provide a cash flow analysis for UPS (United Parcel Service). Discuss the three components

Answer 1

The cash flow statement provides information about a company’s cash receipts and cash payments during an accounting period, showing how these cash flaws link the ending cash balance to the beginning balance shown on the company’s statement of financial position.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

See Also:

Union Pacific Corp. (UNP), Cash Flows

CSX Corp. (CSX), Cash Flows

FedEx Corp. (FDX), Cash Flows

United Parcel Service Inc., Consolidated Statement of Cash Flows

USD $ in millions

	12 months ended	Dec 31, 2017		Dec 31, 2016		Dec 31, 2015		Dec 31, 2014		Dec 31, 2013
	Net income	4,910		3,431		4,844		3,032		4,372
	Depreciation and amortization	2,282		2,224		2,084		1,923		1,867
	Pension and postretirement benefit expense	1,643		3,725		1,189		3,040		1,115
	Pension and postretirement benefit contributions	(7,794)		(2,668)		(1,229)		(1,258)		(212)
	Settlement of postretirement benefit obligation	–		–		–		(2,271)		–
	Self-insurance reserves	–		(21)		(80)		(201)		34
	Deferred tax expense	1,230		123		540		385		(246)
	Stock compensation expense	584		591		574		536		513
	Other (gains) losses	37		(198)		(185)		218		35
	Accounts receivable	(1,022)		(704)		(452)		(523)		(515)
	Other assets	(982)		(14)		414		112		(13)
	Accounts payable	592		461		(147)		276		218
	Accrued wages and withholdings	193		109		(63)		106		416
	Other liabilities	(241)		(561)		(6)		317		(140)
	Changes in assets and liabilities, net of effect of acquisitions	(1,460)		(709)		(254)		288		(34)
	Other operating activities	47		(25)		(53)		34		(140)
	Adjustments to reconcile net income to net cash from operating activities	(3,431)		3,042		2,586		2,694		2,932
	Net cash from operating activities	1,479		6,473		7,430		5,726		7,304
	Capital expenditures	(5,227)		(2,965)		(2,379)		(2,328)		(2,065)
	Proceeds from disposals of property, plant and equipment	24		88		26		53		104
	Purchases of marketable securities	(1,634)		(4,816)		(7,415)		(3,525)		(2,948)
	Sales and maturities of marketable securities	1,990		5,724		6,388		3,106		2,957
	Net decrease in finance receivables	5		9		5		44		39
	Cash paid for business acquisitions	(134)		(547)		(1,904)		(88)		(22)
	Other investing activities	1		(59)		(30)		(63)		(179)
	Net cash used in investing activities	(4,975)		(2,566)		(5,309)		(2,801)		(2,114)
	Net change in short-term debt	(250)		(88)		2,529		–		–
	Proceeds from long-term borrowings	12,016		5,927		3,783		1,525		100
	Repayments of long-term borrowings	(3,939)		(3,805)		(2,724)		(1,694)		(1,875)
	Purchases of common stock	(1,813)		(2,678)		(2,702)		(2,695)		(3,838)
	Issuances of common stock	247		245		249		274		491
	Dividends	(2,771)		(2,643)		(2,525)		(2,366)		(2,260)
	Other financing activities	(203)		(98)		(175)		(205)		(425)
	Net cash from (used in) financing activities	3,287		(3,140)		(1,565)		(5,161)		(7,807)
	Effect of exchange rate changes on cash and cash equivalents	53		(21)		(117)		(138)		(45)
	Net increase (decrease) in cash and cash equivalents	(156)		746		439		(2,374)		(2,662)
	Cash and cash equivalents, beginning of period	3,476		2,730		2,291		4,665		7,327
	Cash and cash equivalents, end of period	3,320		3,476		2,730		2,291		4,665

Based on: 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-27),10-K (filing date: 2014-02-28).

United Parcel Service Inc., Consolidated Statement of Cash Flows, Selected ItemsNet cash from oper…Net cash used in inv…Net cash from (used…Dec 31, 2013Dec 31, 2014Dec 31, 2015Dec 31, 2016Dec 31, 2017-10,000-5,00005,00010,000USD $ in millions

12 months ended	Net cash from operating activities	Net cash used in investing activities	Net cash from (used in) financing activities
Dec 31, 2013	7,304	-2,114	-7,807
Dec 31, 2014	5,726	-2,801	-5,161
Dec 31, 2015	7,430	-5,309	-1,565
Dec 31, 2016	6,473	-2,566	-3,140
Dec 31, 2017	1,479	-4,975	3,287

Item	Description	The company
Net cash from operating activities	Amount of cash inflow (outflow) from operating activities, excluding discontinued operations. Operating activity cash flows include transactions, adjustments, and changes in value not defined as investing or financing activities.	United Parcel Service Inc.’s net cash from operating activities declined from 2015 to 2016 and from 2016 to 2017.
Net cash used in investing activities	Amount of cash inflow (outflow) of investing activities, excluding discontinued operations. Investing activity cash flows include making and collecting loans and acquiring and disposing of debt or equity instruments and property, plant, and equipment and other productive assets.	United Parcel Service Inc.’s net cash used in investing activities increased from 2015 to 2016 but then slightly declined from 2016 to 2017 not reaching 2015 level.
Net cash from (used in) financing activities	Amount of cash inflow (outflow) of financing activities, excluding discontinued operations. Financing activity cash flows include obtaining resources from owners and providing them with a return on, and a return of, their investment; borrowing money and repaying amounts borrowed, or settling the obligation; and obtaining and paying for other resources obtained from creditors on long-term credit.	United Parcel Service Inc.’s net cash from (used in) financing activities declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.

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