25 in 1999, $0.24 in 2000 and $0.23 in 2001. This earning is after deducting cost of sales and operating expenses.
The following were the cash flows from 3 activities of Merck and ICN (figures were in dollars):
Cash inflow (outflow)
Merck & Co., Inc.
ICN Pharmaceutical Inc.
From operating activities
From Investing activities
From Financing activities
Operating cash flow is the cash that the Company generates through running its business. Considering cash flows of both Companies were positive, it can mean that their working capital is more than adequate to meet the operating requirements of the Company.
Cash flow from investing activities were aggregate change in a companys cash position resulting from any gains (or losses) from investments in the financial markets and operating subsidiaries, and changes resulting from amounts spent on investments in capital assets such as plant and equipment.
Mercks outflow was mainly due to environmental facilities while ICN on research and development and distribution facilities, in addition to acquisitions of license rights, product lines and businesses
Cash flow from financing were external activities such as issuing cash dividends, adding or changing loans, or issuing and selling more stock. This section of the statement of cash flows measures the flow of cash between a firm and its owners and creditors. Mercks outflow was mainly due to purchase of treasury stocks and payment of dividends. ICNs was an inflow due to proceeds from long-term debts and notes payable.
In this regard, it is best to keep in mind that negative outflow in one of the Companys activities does not mean that they are losing..