Cash Flow Statement

Beginner level

The cash flow statement provides information about a company’s 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’s 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.

Merck & Co. Inc., 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 income	9,777	6,193	2,418	3,941	4,459
Depreciation and amortization	3,652	4,519	4,637	5,441	6,375
Intangible asset impairment charges	1,040	296	646	3,948	162
Charge for the acquisition of Peloton Therapeutics, Inc.	993	—	—	—	—
Charge for future payments related to collaboration license options	—	650	500	—	—
Provisional charge for one-time transition tax related to the enactment of U.S. tax legislation	—	—	5,347	—	—
Charge related to the settlement of worldwide Keytruda patent litigation	—	—	—	625	—
Foreign currency devaluation related to Venezuela	—	—	—	—	876
Net charge related to the settlement of Vioxx shareholder class action litigation	—	—	—	—	680
Deferred income taxes	(556)	(509)	(2,621)	(1,521)	(764)
Share-based compensation	417	348	312	300	299
Other	184	978	229	243	602
Accounts receivable	294	(418)	297	(619)	(480)
Inventories	(508)	(911)	(145)	206	805
Trade accounts payable	399	230	254	278	(37)
Accrued and other current liabilities	376	(341)	(922)	(2,018)	(8)
Income taxes payable	(2,359)	827	(3,291)	124	(266)
Noncurrent liabilities	(237)	(266)	(123)	(809)	(277)
Other	(32)	(674)	(1,091)	237	(5)
Net changes in assets and liabilities	(2,067)	(1,553)	(5,021)	(2,601)	(268)
Adjustments to reconcile net income to net cash provided by operating activities	3,663	4,729	4,029	6,435	7,962
Net cash provided by operating activities	13,440	10,922	6,447	10,376	12,421
Capital expenditures	(3,473)	(2,615)	(1,888)	(1,614)	(1,283)
Purchases of securities and other investments	(3,202)	(7,994)	(10,739)	(15,651)	(16,681)
Proceeds from sales of securities and other investments	8,622	15,252	15,664	14,353	20,413
Acquisition of Antelliq Corporation, net of cash acquired	(3,620)	—	—	—	—
Acquisition of Peloton Therapeutics, Inc., net of cash acquired	(1,040)	—	—	—	—
Dispositions of other businesses, net of cash divested	—	—	—	—	316
Acquisition of Cubist Pharmaceuticals, Inc., net of cash acquired	—	—	—	—	(7,598)
Other acquisitions, net of cash acquired	(294)	(431)	(396)	(780)	(146)
Other	378	102	38	482	221
Net cash (used in) provided by investing activities	(2,629)	4,314	2,679	(3,210)	(4,758)
Net change in short-term borrowings	(3,710)	5,124	(26)	—	(1,540)
Payments on debt	—	(4,287)	(1,103)	(2,386)	(2,906)
Proceeds from issuance of debt	4,958	—	—	1,079	7,938
Purchases of treasury stock	(4,780)	(9,091)	(4,014)	(3,434)	(4,186)
Dividends paid to stockholders	(5,695)	(5,172)	(5,167)	(5,124)	(5,117)
Proceeds from exercise of stock options	361	591	499	939	485
Other	5	(325)	(195)	(118)	56
Net cash used in financing activities	(8,861)	(13,160)	(10,006)	(9,044)	(5,270)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	17	(205)	457	(131)	(1,310)
Net increase (decrease) in cash, cash equivalents and restricted cash	1,967	1,871	(423)	(2,009)	1,083
Cash, cash equivalents and restricted cash at beginning of year	7,967	6,096	6,515	8,524	7,441
Cash, cash equivalents and restricted cash at end of year	9,934	7,967	6,092	6,515	8,524

Based on: 10-K (filing date: 2020-02-26), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-26).

Cash flow statement item	Description	The company
Net cash provided by 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.	Merck & Co. Inc.’s net cash provided by operating activities increased from 2017 to 2018 and from 2018 to 2019.
Net cash (used in) provided by 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.	Merck & Co. Inc.’s net cash (used in) provided by investing activities increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.
Net cash 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.	Merck & Co. Inc.’s net cash used in financing activities decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.

Merck & Co. Inc. (NYSE:MRK)

Cash Flow Statement