If you want to know complete information about **cash flow to stockholders**, then you landed on the right page.

In this article, I included what cash flow to stockholders is, how to calculate it, the formula, and an example.

## What is Cash Flow to Stockholders

Cash flow to stockholders is the cash going from the company to stockholders in the form of dividends. In other words, it is the amount of cash that the company pays out to its shareholders.

Using this metric, investors can determine whether the company is worth investing in because everyone wants the company to pay them dividends.

### How to Calculate Cash Flow to Stockholders

Calculating cash flow to stockholders is not a complex task; we just need some figures to find out.

Subtracting the value of raised net equity from dividends paid by the company gives us the value of CFS.

### Cash Flow to Stockholders Formula

The **formula** of Cash Flow to Stockholders is straightforward:

Or in short form:

\text{CFS} = \text{DP} - \text{RE}

Here,

CFS = Cash Flow to Stockholders

DP = Dividend Paid

RE = Net Equity Raised

To calculate cash flow to stockholders, we need two figures from financial statements. **Dividends paid** can be found in the financial section of the cash flow statement, while **net equity** can be found in the balance sheet.

Here’s how we can calculate net equity: Total stockholders’ equity of the current year minus total stockholders’ equity of the last year.

### Cash Flow to Stockholders Example

In this section, I include an **example**.

I took the example of TCS, an IT service company. (Numbers are in millions)

They paid dividends to their investors worth $10,850 in the year 2020,

and its net equity is $84,759 for the year 2019 and $87,108 for the year 2020. So, the net equity is $2,349.

Let’s **calculate** the cash flow to stockholders:

\text{CFS} = {\$10,850 - \$2,349}

\text{CFS} = \$8,501 \text{million}

Here, a CFS value of $8,501 means the company is spending this money on investors.

## Negative Cash Flow to Stockholders

It’s not necessary for the result to always be positive; sometimes, it can be negative too. If we look at the formula, it will be clear that net equity (issuing new stock) is the only factor that can lead to a negative result. Other factors, like paid dividends, can never be negative.

This can normally happen in the first year of the company when it issues all its stock in the market.

**Conclusion**

I hope you liked this brief article about **cash flow to stockholders**. Check out some other articles to enhance your knowledge. Go and explore!