2021 Cash Flow Analysis for American Express Co AXP

American Express Company is a multinational financial services corporation known for its credit card, charge card, and traveler's cheque businesses. The company is headquartered in New York City and was founded in 1850. American Express is recognized for its premium customer service and membership rewards programs, as well as its strong brand presence in the financial services sector.

The cash flow statement provides insights into how much cash or cash equivalents a company has generated and used over a specific period. It is divided into three sections: operating activities, investing activities, and financing activities. This statement is crucial for investors and analysts to understand how a company manages its cash resources.

How to read the chart

The chart above illustrates the cash flow of American Express in 2021. The width of the bars represents the amount of cash flow, with wider bars indicating larger amounts.

We begin on the left with the company's cash position at the start of the year. During the year, the cash decreased, indicating that a portion of that cash was used for financing and investing activities. The cash flow from operating activities is the primary source of cash, whereas the cash flow from investing activities is negative, reflecting more spending on new investments than income from selling assets. The cash flow from financing activities is also negative, indicating that the company paid out more cash for purposes such as debt repayments or dividend payments.

After accounting for the change in cash, we conclude on the right with the company's cash position at the end of the year.

Real-Time Cash Flow Counter

To provide a sense of the scale of American Express's cash flow, we have created a real-time counter that simulates the company's cash flow for 2021. The counter starts when you scroll to this section and runs at the same speed as the company's reported cash flow.

This is not a live counter of real cash flows as they happen, but a simulation based on the company's reported cash flow for 2021. The counter is intended to give you a sense of the scale of the company's cash flow and how quickly it moves.

Cash Flow Statement

In 2021, American Express generated $14,645 million in cash from operating activities, spent $10,529 million on investing activities, and used $14,933 million for financing activities. Consequently, the company's cash balance decreased by $10,937 million during the year.

The company's beginning cash balance was $32,965 million, which typically includes cash and cash equivalents, such as short-term investments that can be easily converted into cash. The ending cash balance was $22,028 million.

The company's capital expenditures for the year were $1,550 million. This amount represents the cash spent on investments in property, plant, and equipment. Subtracting capital expenditures from cash flow from operations gives the company's free cash flow, which was $13,095 million in 2021. This amount represents the cash available to pay dividends, repurchase stock, or make other investments.

Summary

In 2021, American Express demonstrated strong cash flow from operating activities, which was a significant source of cash. However, the company experienced a substantial outflow in both investing and financing activities, leading to a decrease in the overall cash balance by the end of the year. Despite the negative cash flow from investing activities, the company maintained a healthy free cash flow, indicating its ability to fund dividends and other investments.