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.

Zoetis Inc., consolidated cash flow statement

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income before allocation to noncontrolling interests	2,340)	2,111)	2,034)	1,636)	1,500)
Depreciation and amortization expense	491)	465)	448)	441)	412)
Share-based compensation expense	60)	62)	58)	59)	67)
Asset write-offs and asset impairments	46)	53)	47)	43)	7)
Net gain on sale of businesses, excluding transaction costs	(118)	—)	—)	—)	—)
Provision for losses on inventory	115)	76)	46)	105)	68)
Deferred taxes	(61)	(286)	(80)	(62)	(79)
Settlement of derivative contracts	—)	114)	—)	(6)	—)
Employee benefit plan contribution from Pfizer Inc.	—)	3)	3)	3)	3)
Other non-cash adjustments	(8)	13)	—)	(8)	(32)
Accounts receivable	(102)	(137)	(155)	74)	(69)
Inventories	(361)	(486)	(366)	(346)	(104)
Other assets	(95)	35)	(7)	(68)	(51)
Accounts payable	13)	(29)	(17)	147)	(10)
Other liabilities	67)	(180)	227)	91)	91)
Other tax accounts, net	(34)	98)	(25)	17)	(8)
Other changes in assets and liabilities, net of acquisitions and divestitures	(512)	(699)	(343)	(85)	(151)
Adjustments to reconcile net income before noncontrolling interests to net cash provided by operating activities	13)	(199)	179)	490)	295)
Net cash provided by operating activities	2,353)	1,912)	2,213)	2,126)	1,795)
Capital expenditures	(732)	(586)	(477)	(453)	(460)
Acquisitions, net of cash acquired	(155)	(312)	(14)	(113)	(195)
Purchase of investments	(4)	(9)	(12)	—)	—)
Proceeds from maturities and redemptions of investments	—)	—)	—)	—)	101)
Proceeds from derivative instrument activity, net	12)	23)	44)	(27)	37)
Proceeds from sale of businesses, net of cash sold	96)	—)	—)	—)	—)
Net proceeds from sale of assets	4)	1)	2)	21)	21)
Other investing activities	2)	—)	(1)	—)	(8)
Net cash used in investing activities	(777)	(883)	(458)	(572)	(504)
Increase (decrease) in short-term borrowings, net	1)	2)	(4)	4)	(9)
Principal payments on long-term debt	(1,350)	—)	(600)	(500)	—)
Proceeds from issuance of long-term debt, senior notes, net of discount	—)	1,348)	—)	1,240)	—)
Payment of debt issuance costs	—)	(10)	—)	(12)	—)
Payment of consideration related to previous acquisitions	(3)	(1)	(6)	(2)	(9)
Share-based compensation-related proceeds, net of taxes paid on withholding shares	27)	(38)	(35)	20)	7)
Purchases of treasury stock	(1,092)	(1,594)	(743)	(250)	(626)
Cash dividends paid	(692)	(611)	(474)	(380)	(314)
Acquisition of a noncontrolling interest, net of cash acquired	—)	—)	—)	3)	—)
Net cash provided by (used in) financing activities	(3,109)	(904)	(1,862)	123)	(951)
Effect of exchange-rate changes on cash and cash equivalents	(7)	(29)	(12)	(7)	(8)
Net increase (decrease) in cash and cash equivalents	(1,540)	96)	(119)	1,670)	332)
Cash and cash equivalents at beginning of period	3,581)	3,485)	3,604)	1,934)	1,602)
Cash and cash equivalents at end of period	2,041)	3,581)	3,485)	3,604)	1,934)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The financial data reveals several significant trends in profitability, cash flow, and capital allocation over the five-year period.

Profitability and Non-Cash Expenses: Net income before allocation to noncontrolling interests demonstrated a consistent upward trend, increasing from $1,500 million in 2019 to $2,340 million in 2023. Depreciation and amortization expenses also rose steadily, reflecting ongoing investment in fixed assets. Share-based compensation expenses remained relatively stable throughout the period, fluctuating around $60 million. Asset write-offs and impairments showed increased amounts in 2020-2022, peaking at $53 million in 2022, before slightly declining in 2023.
Inventory and Receivables: Inventories experienced substantial reductions, particularly noticeable in 2020 and 2022, with a large negative change in working capital reflecting inventory depletion or efficient management. Accounts receivable presented volatility, including notable decreases in 2021 and 2022, suggesting variability in collection or sales timing.
Operating Cash Flow and Adjustments: Net cash provided by operating activities increased overall, peaking at $2,353 million in 2023, despite a dip in 2022. Adjustments to reconcile net income to net cash from operating activities were significant in 2020 and negative in 2022, indicating fluctuations in non-cash items and changes in working capital.
Investing Activities: Capital expenditures expanded notably, reaching $732 million in 2023, indicating increased investment in property, plant, and equipment. Acquisitions displayed variability, with sizable outflows in 2019, 2020, and 2022, while purchase of investments remained minor and decreasing. Proceeds from asset sales were minimal but stable. Overall, net cash used in investing activities grew significantly in 2022, reflecting elevated capital investments and acquisitions, before subsiding slightly in 2023.
Financing Activities: Financing activities reflected considerable shifts. Principal payments on long-term debt were substantial in 2020, 2021, and especially 2023, indicating debt reduction efforts. Conversely, issuances of long-term debt increased in 2020 and 2022, balancing repayments. Purchases of treasury stock were consistently large, peaking in 2022. Dividends paid showed a rising trend, highlighting commitment to shareholder returns. The net cash flow from financing activities was positive only in 2020, turning negative in subsequent years, reaching a high outflow of $3,109 million in 2023.
Liquidity: Cash and cash equivalents surged by $1,670 million in 2020, likely related to debt issuance and operating surplus but then decreased sharply by $1,540 million in 2023, reflecting significant financing outflows and capital expenditures. End-of-period cash balances remained substantial but declined after peaking in 2020.
Other Notable Items: The net gain on sale of businesses was only reported in 2023 with a negative impact of $118 million. Deferred taxes showed fluctuations with a notable sharp increase in 2022. Settlement of derivative contracts varied, with a significant positive effect in 2022. Other changes in assets and liabilities consistently contributed negatively to cash flow.

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Zoetis Inc. (NYSE:ZTS)

Cash Flow Statement