/sec-cash-flow-review

name: sec-cash-flow-review
description: Extract and analyze cash flow trends and working capital changes from SEC filings using Octagon MCP. Use when researching operating cash flow, investing activities, financing activities, free cash flow, liquidity, and working capital dynamics from 10-K and 10-Q filings.

SEC Cash Flow Review

Extract and analyze cash flow trends and working capital changes from SEC filings for public companies using the Octagon MCP server.

Prerequisites

Ensure Octagon MCP is configured in your AI agent (Cursor, Claude Desktop, Windsurf, etc.). See [references/mcp-setup.md](references/mcp-setup.md) for installation instructions.

Workflow

1. Identify Analysis Parameters

Determine the following before querying:

• **Ticker**: Stock symbol (e.g., AAPL, MSFT, GOOGL)
• **Filing Type** (optional): 10-K (annual) or 10-Q (quarterly)
• **Focus Area** (optional): Operating, investing, financing, working capital

2. Execute Query via Octagon MCP

Use the `octagon-agent` tool with a natural language prompt:

Extract and analyze cash flow trends and working capital changes from <TICKER>'s latest 10-Q.

**MCP Call Format:**

{
  "server": "octagon-mcp",
  "toolName": "octagon-agent",
  "arguments": {
    "prompt": "Extract and analyze cash flow trends and working capital changes from NFLX's latest 10-Q."
  }
}

3. Expected Output

The agent returns structured cash flow analysis including:

**Cash Flow Trends:**

• Operating Cash Flow: Increased 37.87% YoY
• Investing Cash Flow: -$2.08B (CapEx, investments)
• Financing Cash Flow: Mixed ($1.04B inflow, -$2.18B outflow)

**Working Capital Changes:**

• Change in Working Capital: -$456M
• Cash and Equivalents: Decreased $1.193B in 6 months

**Key Observations:**

• Operating cash flow growth outpaces investing/financing
• Working capital contraction from content investments
• Liquidity sufficient for 12+ months

**Data Sources**: octagon-financials-agent, octagon-sec-agent, octagon-web-search-agent

4. Interpret Results

See [references/interpreting-results.md](references/interpreting-results.md) for guidance on:

• Understanding cash flow components
• Evaluating cash flow quality
• Analyzing working capital trends
• Assessing liquidity position

Example Queries

**Full Cash Flow Analysis:**

Extract and analyze cash flow trends and working capital changes from NFLX's latest 10-Q.

**Free Cash Flow Focus:**

Calculate and analyze free cash flow trends for AAPL over the last 4 quarters.

**Working Capital Deep Dive:**

Analyze working capital changes and cash conversion cycle for AMZN from the latest 10-K.

**Liquidity Assessment:**

Evaluate TSLA's liquidity position and cash runway from the latest quarterly filing.

**CapEx Analysis:**

Extract capital expenditure trends and investment priorities from GOOGL's cash flow statement.

**Financing Activities:**

Analyze debt repayments, share buybacks, and dividend payments from MSFT's latest 10-K cash flow.

Cash Flow Statement Components

Operating Activities

| Component | Description | |-----------|-------------| | Net Income | Starting point | | Depreciation/Amortization | Non-cash add-back | | Stock Compensation | Non-cash expense | | Deferred Taxes | Timing differences | | Working Capital Changes | Current asset/liability changes | | Other Adjustments | Non-cash items |

Investing Activities

| Component | Description | |-----------|-------------| | Capital Expenditures | Property, equipment purchases | | Acquisitions | Business combinations | | Investment Purchases | Securities bought | | Investment Sales | Securities sold | | Asset Dispositions | Property, equipment sales |

Financing Activities

| Component | Description | |-----------|-------------| | Debt Issuance | Borrowings | | Debt Repayment | Principal payments | | Share Issuance | Stock offerings | | Share Repurchases | Buybacks | | Dividends | Shareholder distributions |

Key Cash Flow Metrics

Profitability vs. Cash

| Metric | Calculation | What It Shows | |--------|-------------|---------------| | Operating Cash Flow | From statement | Cash from operations | | Free Cash Flow | OCF - CapEx | Cash after investment | | FCF Margin | FCF / Revenue | Cash generation rate | | Cash Conversion | OCF / Net Income | Earnings quality |

Liquidity Metrics

| Metric | Calculation | What It Shows | |--------|-------------|---------------| | Cash Position | Cash + equivalents | Available liquidity | | Cash Runway | Cash / Monthly Burn | Months of runway | | Quick Ratio | (Cash + Receivables) / Current Liabilities | Short-term coverage | | Current Ratio | Current Assets / Current Liabilities | Working capital |

Investment Metrics

| Metric | Calculation | What It Shows | |--------|-------------|---------------| | CapEx Intensity | CapEx / Revenue | Investment level | | CapEx / D&A | CapEx / Depreciation | Maintenance vs. growth | | Acquisition Spend | From investing | M&A activity | | Investment Returns | Sales / Purchases | Portfolio activity |

Working Capital Analysis

Components

| Component | Increase Means | Decrease Means | |-----------|----------------|----------------| | Accounts Receivable | Cash used | Cash provided | | Inventory | Cash used | Cash provided | | Prepaid Expenses | Cash used | Cash provided | | Accounts Payable | Cash provided | Cash used | | Accrued Liabilities | Cash provided | Cash used | | Deferred Revenue | Cash provided | Cash used |

Cash Conversion Cycle

| Metric | Calculation | |--------|-------------| | Days Sales Outstanding | (AR / Revenue) × 365 | | Days Inventory Outstanding | (Inventory / COGS) × 365 | | Days Payables Outstanding | (AP / COGS) × 365 | | Cash Conversion Cycle | DSO + DIO - DPO |

Working Capital Trends

| Trend | Interpretation | |-------|----------------| | Declining CCC | Improved efficiency | | Rising CCC | Cash tied up longer | | N