ShmoopTube

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principles of finance - a la shmoop. what is accrual accounting and why do I

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care? all right well the $5 word of the day is accrual. and note that you accrue

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at your own peril if you act crew too aggressively or to passively when you [accrue defined]

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depreciate that tractor factory. think accrual is the Lazarus anti to lien of

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cash accounting or something like that. all right free cash flow is the Golden

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Goose . and in the management of companies it is the smell of napalm in the morning.

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all right well when you have free cash flow you have options. you can buy back

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your own stock. you can buy your competitors and raise prices or lower

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expenses or both. or you could raise your dividend or just pay one if you weren't.

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in any outcome free cash is generally happy cash. right well the goal here is

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to magically convert accrual basis earnings into cash generated from or

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consumed by operations. so how do we do that? all right we're gonna delve into [cash in a melting pot]

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Mattel corporation yes the makers of Barbie and Ken in the Easy Bake Oven.

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just because we think it's so odd that these gender and racial stereotypes

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still get sold to the young people of this country and around the world. oh and

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because Mattel is pretty easy to understand. they basically remould cheap

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plastic into a relatively expensive representations of humans and then sell

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them on the web and in toy stores around the world. well here's a recent set of

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filings glanced through the balance sheet and the statement of operations-

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fancy name for income statement. and get quickly to the consolidated statements [income statements stacked]

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of cash flows. note that this is yep consolidated .Mattel has many divisions

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and does business in many countries and this consolidated thing is just a

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mash-up of all of those discrete elements inside the company to produce

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one document that everyone can look at. why is this good? well because you can't

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invest only in Mattel Singapore. you can did Mattel corporation that's it. so the

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good the bad the ugly they all go into soup that you are eating. think of that [ doll parts thrown in a soup]

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when you slurp.

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