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Principles of finance ah la shmoop cash flow from financing

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activities All right one more time with filings that start

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with the first line right there Net So first of

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all remember that short term borrowing zehr things coming due

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within the next year And you have already had your

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little lesson on the yield curve remember and have noted

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that interest rates in this era are extremely low So

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quote one year paper unquote cost like one percent and

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change for most companies one percent to rent the money

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for you know that time period All right so if

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company is making payments of sixteen million dollars for a

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half year well you could impute that those payments for

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a full year would be like double or thirty two

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million If those payments represented one percent of their total

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short term borrowings then that would imply that they had

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one hundred x thirty two million or three point two

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billion dollars in short term debt Yowza that would be

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a lot of debt And fortunately for m a t

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that's not the case they have kind of offsetting categories

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here just below called proceeds from short term borrowings Net

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So they generated sixty seven million dollars from short term

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borrowings that seem strange to you that this is a

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totally even number you know Well it should That is

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it is likely then the company simply took out a

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short term loan for sixty seven million dollars during this

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period Yes it raised cash for them And well that's

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all we care about in this set of statements but

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it made them more indebted as well Alright next line

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payments of dividends on common stock Wow Two hundred fifty

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nine million box Painful Why is a company who is

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hemorrhaging like this paying a dividend Well you can imagine

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that it's a stress point in the board meetings if

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company kept that money while they could pay down a

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lot of death they've incurred But if they kept it

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in didn't pay a dividend all their stock would crater

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should boards worry about stuff like this Like dividend payment

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will Yes but are they supposed to be long term

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greedy and build a great business rather than short term

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greedy and worry about stock prices next quarter and a

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cratering and all that Well lots to think about there

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We'll get to business ethics here down the road Alright

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Well next up from mattel is proceeds from exercise of

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stock options Okay here's how that one works given employee

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joined the company eight years ago when the stock was

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really in the dumps at five bucks a share they

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were granted a million options and they vested into them

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over four years So they own a million options at

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a five dollars strike price Now eight years later employee

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wants teo buy a condo You know a big one

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The stock price today is twenty five dollars a share

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So that employees calls her friendly broker and says hi

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I want to make a same day sale exercising my

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million shares The broker does the happy commission dance and

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says dude that's a million shares at twenty dollars a

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share in the money twenty five dollars minus five dollars

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here that's how we got twenty to give you twenty

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million dollars and we'll have to take a few cents

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a share commission if that's alright with you Alright Well

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from mattel side they just got five million dollars How

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Well Because the stock option struck at five dollars and

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the employees had been granted a million of them so

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that exercise of the stock option just generated five million

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bucks in cash for mattel Thank you very much It

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also created a million more shares of dilution for the

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company but we're not gonna worry about that part much

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Right now Anyhoo the company lost on this third leg

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in the cash flow statements one hundred ninety four million

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dollars in cash mainly due to the continued paying of

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dividends Ignore the foreign currency thing for now and just

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note that mattel burned in the first half of the

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year five hundred seventy five million dollars They started the

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period with eight hundred ninety two million and ended it

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with three hundred eighteen million Wow painful let's hope they 00:03:50.83 --> [endTime] have a good christmas

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