Analyzing VMware’s Cash and Cash Flow



VMware’s cash, debt, and cash flow positions

Let’s have a look at VMware’s cash, debt, and cash flows in its most recent quarter. In fiscal 1Q18, VMware’s cash, cash equivalents, and short-term investments totaled $8.6 billion. It generated OCF (operating cash flow) and FCF (free cash flow) of $775 million and $726 million, respectively.

VMW has $1.5 billion worth of total debt on its books as of fiscal 1Q18, which is composed entirely of notes payable to EMC.

The company’s strong cash reserves and relatively low debt indicate its financial strength.

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Strong free cash flow allows room for stock price appreciation

VMware’s strategic shift toward the cloud space, coupled with its management’s focus on costs, has led to an expansion in its overall net margin. The cloud space has a high margin field in the tech space. Higher gross margins translate to higher cash flows.

We’re emphasizing VMware’s free cash flow because it gives us an indication of the cash that’s left over after capital expenditures. This is the money that’s most likely to reach the company’s shareholders, which is why it’s of special significance to investors and shareholders.


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