Name: McKesson Corp. (NYSE:MCK) | 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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McKesson Corp., consolidated cash flow statement

US$ in millions

12 months ended:	Mar 31, 2016	Mar 31, 2015	Mar 31, 2014	Mar 31, 2013	Mar 31, 2012	Mar 31, 2011
Net income	2,310)	1,543)	1,258)	1,338)	1,403)	1,202)
Discontinued operation, gain on sale, net of tax	—)	—)	—)	—)	—)	(72)
Depreciation	281)	306)	186)	146)	140)	139)
Amortization	604)	711)	518)	445)	411)	357)
Deferred taxes	64)	171)	16)	606)	164)	128)
Share-based compensation expense	123)	174)	160)	167)	154)	137)
Gain from sales of businesses	(103)	—)	—)	—)	—)	—)
Gain on business combination	—)	—)	—)	(81)	—)	—)
Impairment charges and impairment of equity investment	8)	241)	—)	191)	—)	—)
Charges associated with last-in-first-out inventory method	244)	337)	311)	—)	—)	—)
Other non-cash items	108)	47)	130)	94)	96)	102)
Adjustments to reconcile to net cash provided by operating activities	1,329)	1,987)	1,321)	1,568)	965)	863)
Receivables	(1,957)	(2,821)	(885)	326)	(770)	(673)
Inventories	(1,251)	(2,144)	(1,201)	(59)	(878)	367)
Drafts and accounts payable	3,302)	4,718)	2,412)	(125)	2,027)	533)
Deferred revenue	(120)	(141)	(36)	(25)	66)	42)
Taxes	(78)	(222)	218)	(80)	15)	33)
Changes in operating assets and liabilities, net of acquisitions	(104)	(610)	508)	37)	460)	302)
Claim and litigation charges	—)	150)	68)	72)	149)	213)
Litigation settlement payments	—)	—)	(105)	(483)	(26)	(26)
Other	137)	42)	86)	(49)	(1)	(144)
Net cash provided by operating activities	3,672)	3,112)	3,136)	2,483)	2,950)	2,338)
Payments for property, plant and equipment	(488)	(376)	(278)	(246)	(225)	(233)
Capitalized software expenditures	(189)	(169)	(141)	(160)	(178)	(155)
Acquisitions, net of cash and cash equivalents acquired	(40)	(170)	(4,634)	(1,873)	(1,156)	(292)
Proceeds from sale of businesses and equity investment, net	210)	15)	97)	—)	—)	109)
Restricted cash for acquisitions	(939)	—)	46)	—)	—)	—)
Other	(111)	23)	(136)	70)	57)	(53)
Net cash used in investing activities	(1,557)	(677)	(5,046)	(2,209)	(1,502)	(624)
Proceeds from short-term borrowings	1,561)	3,100)	6,145)	2,225)	400)	1,000)
Repayments of short-term borrowings	(1,688)	(3,152)	(6,122)	(2,625)	—)	(1,000)
Proceeds from issuances of long-term debt	—)	3)	4,114)	1,798)	—)	1,689)
Repayments of long-term debt	(1,598)	(353)	(356)	(1,143)	(430)	(1,730)
Common stock transactions, issuances	123)	152)	177)	166)	167)	367)
Common stock transactions, share repurchases, including shares surrendered for tax withholding	(1,612)	(450)	(130)	(1,214)	(1,874)	(2,050)
Common stock transactions, dividends paid	(244)	(227)	(214)	(194)	(195)	(171)
Other	5)	(41)	5)	31)	27)	54)
Net cash provided by (used in) financing activities	(3,453)	(968)	3,619)	(956)	(1,905)	(1,841)
Effect of exchange rate changes on cash and cash equivalents	45)	(319)	28)	(11)	(6)	8)
Net increase (decrease) in cash and cash equivalents	(1,293)	1,148)	1,737)	(693)	(463)	(119)
Cash and cash equivalents at beginning of year	5,341)	4,193)	2,456)	3,149)	3,612)	3,731)
Cash and cash equivalents at end of year	4,048)	5,341)	4,193)	2,456)	3,149)	3,612)

Based on: 10-K (reporting date: 2016-03-31), 10-K (reporting date: 2015-03-31), 10-K (reporting date: 2014-03-31), 10-K (reporting date: 2013-03-31), 10-K (reporting date: 2012-03-31), 10-K (reporting date: 2011-03-31).

Operating cash flow demonstrates a consistent upward trajectory over the six-year period, increasing from 2,338 million USD in 2011 to 3,672 million USD in 2016. This growth is supported by a general rise in net income, which nearly doubled from 1,202 million USD in 2011 to 2,310 million USD in 2016, despite some volatility in interim years. The reconciliation of net income to operating cash is characterized by significant non-cash adjustments, most notably a substantial increase in amortization, which peaked at 711 million USD in 2015.

Working Capital Management: Significant volatility is observed in operating assets and liabilities. From 2014 to 2016, there were substantial outflows related to receivables and inventories, particularly in 2015 when receivables decreased cash by 2,821 million USD and inventories by 2,144 million USD. These outflows were largely offset by an increase in drafts and accounts payable, which reached a peak of 4,718 million USD in 2015, suggesting a strategic reliance on supplier financing to manage liquidity during periods of asset growth.
Investment Activity and Capital Expenditure: Investing activities were dominated by a major acquisition cycle, culminating in 2014 with a net cash outflow of 4,634 million USD for acquisitions. Outside of these strategic purchases, payments for property, plant, and equipment showed a steady increase, growing from 233 million USD in 2011 to 488 million USD in 2016. Capitalized software expenditures remained relatively stable, fluctuating between 141 million USD and 189 million USD annually.
Financing and Capital Allocation: Financing activities reflect a dynamic approach to debt and shareholder returns. The significant acquisition spending in 2014 was funded through a combination of short-term borrowings (6,145 million USD) and long-term debt issuances (4,114 million USD). Shareholder returns remained a priority, characterized by consistent dividend growth from 171 million USD in 2011 to 244 million USD in 2016. Share repurchases were aggressive but inconsistent, with a peak of 2,050 million USD in 2011 and another surge to 1,612 million USD in 2016, while activity dipped significantly in 2014.
Liquidity Position: The cash and cash equivalents balance experienced several fluctuations, ending the period at 4,048 million USD. The most notable shift occurred in 2014, where a net increase of 1,737 million USD was recorded, primarily driven by the heavy utilization of financing activities to offset the intensive investment in acquisitions.

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