Capital Allocation History: Method

Capital Allocation History: Method

What it does

A business that earns cash has only a few things it can do with it: spend it on its own buildings and equipment, buy other businesses or securities, pay it to shareholders as dividends or by buying back shares, repay lenders, or keep it. Capital allocation is the name for that set of choices. This page reads the cash flow statements a company filed with the U.S. Securities and Exchange Commission (SEC) for up to ten fiscal years and lays them out as one table: the cash the business generated at the top, each use under it, and the change in cash at the bottom. It then shows the same uses as a percent of the cash generated, totals for the whole period, a bar chart, and a few ratios. It describes what the company did. It does not say whether those choices were good or bad.

The numbers come from a copy of the SEC's public data held on this site (about 640 companies, annual figures, each in the currency the company reports in). Nothing is fetched when you open the page, and the site holds no share prices.

The method

The lines. All are taken from the cash flow statement of each fiscal year. A use of cash is written as a positive number; a negative number in a use row is cash that came in.

OCF = cash from operating activities (the cash generated)
capital spending = payments for property, plant and equipment
investing cash flow other than capital spending = −(cash from investing activities) − capital spending
dividends = dividends paid
share repurchases = payments to buy back shares (gross)
debt repaid, net of debt issued = debt repaid − debt issued
other financing = −(cash from financing activities) − dividends − share repurchases − (debt repaid − debt issued)
change in cash = operating + investing + financing cash flow

Because the two "other" rows are defined as remainders of the statement's own totals, every column closes exactly:

OCF − capital spending − other investing − dividends − share repurchases − net debt repaid − other financing = change in cash

Acquisitions are inside "investing cash flow other than capital spending", together with purchases and sales of securities and sales of businesses; cash received from issuing shares is inside "other financing". The uses table keeps those two residual rows whole so that it always adds up. A separate table then shows, where the company tags them, the cash paid for acquisitions, the proceeds from issuing shares, and share repurchases net of shares issued = repurchases − proceeds from issuing shares. A company that reports acquisitions under an element of its own leaves that cell blank.

Percent of operating cash flow. Each use divided by the OCF of the same year, shown only when OCF is positive. The whole-period column divides the sum of the line over the years by the sum of OCF.

Free cash flow and payout.

free cash flow FCF = OCF − capital spending
paid to shareholders = dividends + share repurchases
share of free cash flow paid out = (dividends + share repurchases) / FCF, when FCF is positive

Reinvestment.

reinvestment rate = capital spending / OCF
capital spending to depreciation = capital spending / depreciation and amortization

The usual definition of the reinvestment rate adds acquisitions to capital spending. Because many companies do not tag acquisitions in a standard way, the page shows capital spending alone and says so; the acquisitions table is beside it. Depreciation and amortization is the yearly accounting charge for the wear of assets already owned; a ratio above 1 means more was spent on equipment than was written off.

Share count and repurchases. With N_A and N_B the diluted weighted-average share counts of the first and the last year (adjusted for stock splits), and B the sum of repurchase spending in the years after the first:

change in share count = N_B / N_A − 1
spending per share of net reduction = B / (N_A − N_B), when the count fell

Shareholder yield. With a market value MC that you type (or your share price × shares outstanding at the latest fiscal year end):

dividend yield = dividends / MC, buyback yield = share repurchases / MC, total = their sum

What it assumes

• That the company reports each line under a standard tag. A line under a tag of the company's own is not found and stays blank. Blank never means zero. An untagged use is still inside the investing or financing total, so it falls into one of the "other" rows.
• That operating cash flow is the cash the business generated. That holds for most industrial, technology and consumer companies. It does not for banks, brokers and insurers, whose operating cash flow includes movements in loans, deposits and trading positions.
• That years can be added. Totals are sums of amounts as filed in each year, not adjusted for inflation; a dollar of 2017 counts the same as a dollar of 2026. A company that changed its reporting currency gets no totals.
• That where only one of debt issued and debt repaid is tagged, the other was nil.
• For the yields: that the market value you type is for the whole company, in the reporting currency.

When it misleads

• Other investing is a mixed bag. A company that moves money between cash and marketable securities shows large positive and negative amounts in that row that are neither acquisitions nor disposals. Apple's row is mostly such movements.
• Repurchases are gross in the uses table. The net figure is in the acquisitions and shares issued table. A company that buys back shares mainly to offset the shares it grants to employees shows large repurchase spending and little fall in the share count. The share-count block shows both for that reason. The "spending per share of net reduction" is arithmetic: it is higher than the average price actually paid, because more shares were bought than the net fall.
• Share-based pay is not a cash use. Paying employees in shares keeps cash from operations higher than it would be if they were paid in cash; the cost shows up as dilution, not in this table.
• Leases and acquisitions paid in shares. Assets obtained through leases, and businesses bought with new shares, use no cash at the time and do not appear as capital spending or investing.
• A single year is noisy. Working-capital swings, a tax payment or one large deal can dominate a year. The whole-period column is steadier, but it hides changes of direction inside the period.
• Percentages of a small base. In a year with little operating cash flow, every use is a very large percent of it.
• Fiscal years differ. A fiscal year is named after the calendar year in which it ends, and the latest one may have ended many months ago; a yield formed with today's market value mixes two dates.

Worked example

Apple Inc., fiscal year ended 26 September 2026, in millions of US dollars as held in the data: cash from operating activities 145,097; capital spending 9,041; cash from investing activities −17,280; dividends 15,721; share repurchases 86,390; debt repaid 12,396 and debt issued 0; cash from financing activities −127,446; depreciation and amortization 13,423.

other investing = 17,280 − 9,041 = 8,239
net debt repaid = 12,396 − 0 = 12,396
other financing = 127,446 − 15,721 − 86,390 − 12,396 = 12,939
change in cash = 145,097 − 17,280 − 127,446 = 371
check: 145,097 − 9,041 − 8,239 − 15,721 − 86,390 − 12,396 − 12,939 = 371

free cash flow = 145,097 − 9,041 = 136,056
paid to shareholders = 15,721 + 86,390 = 102,111, which is 102,111 / 136,056 = 75.1 % of free cash flow
reinvestment rate = 9,041 / 145,097 = 6.2 %; capital spending to depreciation = 9,041 / 13,423 = 0.67

Over fiscal 2017 to 2026 the diluted weighted-average share count went from 21,006.77 million to 14,720.31 million, a change of 14,720.31 / 21,006.77 − 1 = −29.93 %, while 736,966 was spent on repurchases in fiscal 2018 to 2026: 736,966 / (21,006.77 − 14,720.31) = 117.23 dollars per share of net reduction.

A calculator for education and analysis, not investment advice.