Name: General Dynamics Corp. (NYSE:GD) | Cash Flow Statement
Creator: Stock Analysis on Net

Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

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.

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General Dynamics Corp., consolidated cash flow statement

US$ in millions

12 months ended:	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Net earnings	3,484)	3,345)	2,912)	2,955)	2,965)
Depreciation of property, plant and equipment	466)	493)	362)	366)	366)
Amortization of intangible and finance lease right-of-use assets	363)	270)	79)	88)	116)
Equity-based compensation expense	133)	140)	123)	100)	110)
Excess tax benefit from equity-based compensation	—)	—)	—)	—)	(77)
Deferred income tax provision (benefit)	92)	(3)	401)	376)	167)
Discontinued operations, net of tax	—)	13)	—)	107)	—)
Accounts receivable	176)	417)	(195)	(161)	604)
Unbilled receivables	(1,303)	(800)	(987)	(1,033)	231)
Inventories	(376)	(591)	(182)	(154)	(156)
Other current assets	8)	310)	207)	—)	—)
(Increase) decrease in assets, net of effects of business acquisitions	(1,495)	(664)	(1,157)	(1,348)	679)
Accounts payable	6)	(197)	657)	567)	(89)
Customer advances and deposits	(105)	36)	264)	(825)	(1,756)
Other current liabilities	—)	—)	—)	(30)	(83)
Increase (decrease) in liabilities, net of effects of business acquisitions	(99)	(161)	921)	(288)	(1,928)
Other, net	37)	(285)	238)	(158)	101)
Adjustments to reconcile net earnings to net cash from operating activities	(503)	(197)	967)	(757)	(466)
Net cash provided by operating activities	2,981)	3,148)	3,879)	2,198)	2,499)
Capital expenditures	(987)	(690)	(428)	(392)	(569)
Business acquisitions, net of cash acquired	(19)	(10,099)	(399)	(58)	(5)
Maturities of held-to-maturity securities	—)	—)	—)	—)	500)
Proceeds from sales of assets	14)	562)	50)	9)	291)
Other, net	(2)	(7)	(14)	15)	(17)
Net cash (used) provided by investing activities	(994)	(10,234)	(791)	(426)	200)
Dividends paid	(1,152)	(1,075)	(986)	(911)	(873)
Proceeds from (repayments of) commercial paper, net	(850)	850)	—)	—)	—)
Purchases of common stock	(231)	(1,769)	(1,558)	(1,996)	(3,233)
Proceeds from fixed-rate notes	—)	6,461)	985)	992)	—)
Proceeds from floating-rate notes	—)	1,000)	—)	—)	—)
Repayment of CSRA accounts receivable purchase agreement	—)	(450)	—)	—)	—)
Repayment of fixed-rate notes	—)	—)	(900)	(500)	(500)
Other, net	236)	69)	60)	246)	347)
Net cash provided (used) by financing activities	(1,997)	5,086)	(2,399)	(2,169)	(4,259)
Net cash provided (used) by discontinued operations	(51)	(20)	(40)	(54)	(43)
Net increase (decrease) in cash and equivalents	(61)	(2,020)	649)	(451)	(1,603)
Cash and equivalents at beginning of year	963)	2,983)	2,334)	2,785)	4,388)
Cash and equivalents at end of year	902)	963)	2,983)	2,334)	2,785)

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

Analysis of the cash flow trends from 2015 to 2019 reveals a period of stable operational earnings coupled with a significant strategic acquisition and a shifting approach to capital allocation.

Operating Cash Flow Performance: Net earnings demonstrated a steady upward trajectory, increasing from 2,965 million US$ in 2015 to 3,484 million US$ in 2019. Net cash provided by operating activities remained robust, although it exhibited volatility, peaking at 3,879 million US$ in 2017 before stabilizing near 2,981 million US$ by 2019. This volatility is primarily attributed to fluctuations in working capital, specifically within unbilled receivables and customer advances, which created significant swings in the reconciliation of net earnings to operating cash.
Investing Activities and Capital Expenditure: Capital expenditures showed a consistent increase over the five-year period, rising from 569 million US$ in 2015 to 987 million US$ in 2019, indicating a growing commitment to infrastructure and asset modernization. The most prominent event in investing activities occurred in 2018, characterized by a substantial cash outflow of 10,099 million US$ for business acquisitions, which fundamentally shifted the investing cash flow for that fiscal year.
Financing Strategy and Shareholder Returns: A consistent policy of increasing shareholder returns is evident through the growth of dividends paid, which rose annually from 873 million US$ in 2015 to 1,152 million US$ in 2019. Share repurchases were aggressive between 2015 and 2018, peaking at 3,233 million US$ in 2015, but declined sharply to 231 million US$ in 2019. To fund the 2018 acquisition and maintain liquidity, the company utilized significant debt issuance, including 6,461 million US$ from fixed-rate notes and 1,000 million US$ from floating-rate notes.
Liquidity and Cash Position: The overall cash and equivalents position experienced a downward trend over the analyzed period. Starting at 4,388 million US$ at the beginning of 2015, the year-end balance decreased to 902 million US$ by 2019. This reduction reflects the prioritization of strategic acquisitions, sustained dividend growth, and substantial share buybacks over the maintenance of high cash reserves.

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