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.

Sherwin-Williams Co., consolidated cash flow statement

US$ in thousands

12 months ended:	Dec 31, 2025	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021
Net income	2,568,500)	2,681,400)	2,388,800)	2,020,100)	1,864,400)
Depreciation	340,300)	297,400)	292,300)	264,000)	263,100)
Non-cash lease expense	508,600)	460,500)	452,700)	416,900)	400,700)
Amortization of intangible assets	336,600)	326,600)	330,200)	317,100)	309,500)
(Gain) loss on divestiture of business	—)	—)	(20,100)	—)	111,900)
(Gain) loss on extinguishment of debt	—)	—)	12,800)	—)	(1,400)
Impairment	17,800)	—)	57,900)	15,500)	—)
Provisions for environmental-related matters, net	15,300)	(1,300)	80,700)	(7,100)	(4,000)
Provisions for restructuring	111,000)	—)	15,300)	47,300)	—)
Deferred income taxes	153,200)	(74,900)	(88,900)	(144,800)	(80,300)
Stock-based compensation expense	123,500)	138,100)	115,900)	99,700)	97,700)
Amortization of non-traded investments	104,000)	75,000)	65,400)	38,500)	53,600)
(Gain) loss on sale or disposition of assets	(20,800)	(49,900)	900)	(10,700)	(6,100)
Other	2,600)	(10,900)	(8,800)	42,300)	6,800)
(Increase) decrease in accounts receivable	(162,800)	(10,700)	85,600)	(200,200)	(287,800)
(Increase) decrease in inventories	132,500)	(32,900)	323,400)	(666,700)	(228,100)
Increase (decrease) in accounts payable	(37,800)	21,800)	(241,100)	46,600)	346,100)
Increase (decrease) in accrued taxes	(22,500)	(14,300)	(8,900)	(38,100)	(32,700)
Increase (decrease) in accrued compensation and taxes withheld	(25,900)	(7,900)	75,700)	65,800)	(10,900)
(Increase) decrease in refundable income taxes	(16,100)	800)	25,800)	47,600)	(38,500)
Other	(74,800)	(20,700)	363,700)	32,500)	(46,800)
Change in working capital accounts	(207,400)	(63,900)	624,200)	(712,500)	(298,700)
Change in operating lease liabilities	(503,700)	(460,700)	(453,400)	(405,300)	(401,400)
Costs incurred for environmental-related matters	(35,100)	(24,100)	(35,300)	(23,800)	(41,300)
Costs incurred for restructuring	(71,300)	—)	(57,000)	—)	—)
Adjustments to reconcile net income to net operating cash	874,600)	611,900)	1,384,800)	(62,900)	410,100)
Other	8,500)	(140,100)	(251,700)	(37,300)	(29,900)
Net operating cash	3,451,600)	3,153,200)	3,521,900)	1,919,900)	2,244,600)
Capital expenditures	(797,600)	(1,070,000)	(888,400)	(644,500)	(372,000)
Acquisitions of businesses, net of cash acquired	(1,211,300)	(78,900)	(264,700)	(1,003,100)	(210,900)
Proceeds from divestiture of business	—)	—)	103,700)	—)	122,500)
Proceeds from sale of assets	10,700)	11,600)	70,100)	33,200)	14,800)
Other	(68,100)	(59,000)	(60,000)	6,800)	(30,800)
Net investing cash	(2,066,300)	(1,196,300)	(1,039,300)	(1,607,600)	(476,400)
Net increase (decrease) in short-term borrowings	537,400)	288,600)	(603,900)	214,400)	763,900)
Proceeds from long-term debt	1,499,200)	848,700)	—)	999,700)	994,800)
Payments of long-term debt	(1,050,000)	(1,100,000)	(136,400)	(260,300)	(422,900)
Payments for credit facility and debt issuance costs	(13,500)	(8,600)	—)	(7,300)	(11,500)
Payments of cash dividends	(789,800)	(723,400)	(623,700)	(618,500)	(587,100)
Proceeds from stock options exercised	140,600)	242,000)	111,600)	67,300)	192,800)
Treasury stock purchased	(1,656,400)	(1,738,800)	(1,432,000)	(883,200)	(2,752,300)
Proceeds from treasury stock issued	—)	—)	—)	22,000)	11,700)
Proceeds from real estate financing transactions	40,700)	244,200)	306,500)	207,300)	—)
Other	(86,800)	(69,800)	(46,700)	(23,800)	(23,400)
Net financing cash	(1,378,600)	(2,017,100)	(2,424,600)	(282,400)	(1,834,000)
Effect of exchange rate changes on cash	(9,900)	(6,200)	20,000)	3,200)	4,900)
Net increase (decrease) in cash and cash equivalents	(3,200)	(66,400)	78,000)	33,100)	(60,900)
Cash and cash equivalents at beginning of year	210,400)	276,800)	198,800)	165,700)	226,600)
Cash and cash equivalents at end of year	207,200)	210,400)	276,800)	198,800)	165,700)

Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).

The company demonstrates generally positive net income over the observed period, increasing from $1.864 billion in 2021 to $2.681 billion in 2024 before decreasing slightly to $2.569 billion in 2025. However, cash flow patterns reveal a more complex picture, with significant fluctuations across operating, investing, and financing activities.

Operating Activities: Net operating cash flow exhibits considerable variability. It begins at $2.245 billion in 2021, dips to $1.920 billion in 2022, then surges to $3.522 billion in 2023, before declining to $3.153 billion and $3.452 billion in 2024 and 2025 respectively. Adjustments to reconcile net income to net operating cash flow are substantial, particularly in 2023 with $1.385 billion in adjustments, driven by significant items like provisions for environmental-related matters and changes in working capital. Changes in working capital are also volatile, moving from a negative $298.7 million in 2021 to a positive $624.2 million in 2023, and then back to a negative $207.4 million in 2025. The consistent negative adjustment for changes in operating lease liabilities indicates a growing commitment to lease financing.
Investing Activities: Net investing cash flow is consistently negative, indicating ongoing investment in the business. The outflow accelerates from $476.4 million in 2021 to $1.608 billion in 2022, and remains substantial throughout the period, peaking at $2.066 billion in 2025. Capital expenditures are a primary driver of this outflow, increasing from $372.0 million in 2021 to $1.070 billion in 2024 before decreasing to $797.6 million in 2025. Acquisitions of businesses also contribute significantly to the negative cash flow, particularly in 2022 with an outflow of $1.003 billion and in 2025 with $1.211 billion. Proceeds from divestitures and asset sales provide some offset, but are considerably smaller in magnitude.
Financing Activities: Net financing cash flow is largely negative, driven by substantial treasury stock repurchases and dividend payments. Treasury stock purchases are a major outflow, ranging from $883.2 million to $1.739 billion annually. Dividend payments remain consistently high, around $618 million to $789 million per year. The company utilizes both short-term and long-term debt financing, with significant proceeds from long-term debt in 2021, 2022, and 2025, offset by payments of long-term debt. Net increase (decrease) in short-term borrowings fluctuates considerably, indicating active management of short-term funding. Proceeds from real estate financing also contribute to cash inflows.
Cash Position: The net increase or decrease in cash and cash equivalents is relatively small compared to the magnitude of cash flows from operating, investing, and financing activities. The company maintains a cash balance between $165.7 million and $276.8 million throughout the period, with a slight decrease to $207.2 million in 2025. The effect of exchange rate changes on cash is minimal.

Overall, the company generates positive net income and operating cash flow, but significant capital investments, acquisitions, and shareholder returns (dividends and share repurchases) result in substantial negative investing and financing cash flows. The fluctuations in working capital and adjustments to net income suggest active management of the balance sheet and potential non-recurring items impacting cash flow.

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Sherwin-Williams Co. (NYSE:SHW)

Cash Flow Statement