preview

J. B. Hunt Case Analysis

Good Essays
Cash flow throughout the company is broken up into cash generated by operating activities, financing activities, and investing activities. A company’s operating activities are typically what generates more cash and that stays true for J.B. Hunt. J.B. Hunt generated $873 million in 2015, a $226 million increase from the $647 million amount earned in 2014 (10-k, 22). This large increase occurred due to a few occurrences over the year. Over the year, J.B. Hunt had an increase in their earnings and they also collected much of their trade and income tax receivables (10-k, 22). Due to these primary reasons, J.B. Hunt generated more cash from operating activities during 2015. Compared to the amount of cash generated by the operating activities of…show more content…
Hunt has more cash to use in investing and financing activities. J.B. Hunt needs more cash than Landstar in order to invest in equipment that they will need in order to operate during the year. Equipment such as containers, chassis, trucks, tractors, and trailers are all things that J.B. Hunt must invest in so that they can replace old equipment or in order to increase their inventory (10-k, 22). All of this equipment is not necessary for Landstar since they are asset light, therefore they will use substantially less cash in investing activities than J.B. Hunt. For 2015, J.B. Hunt used a total of $577 million in investing activities, a decrease from the amount $660 million used in 2014 (10-k, 22). This decrease was primarily due to less purchases of equipment and an increase in the cash earned from selling equipment over the year (10-k, 22). Even with less need to invest in equipment, J.B. Hunt used a much greater amount of cash on investing than Landstar did during 2015. Landstar used $8 million during 2015, which is an increase from the $4 million amount used in 2014 (LSTR 10-k, 39). As previously stated, this difference is due to J.B. Hunt having a greater amount of cash from operating activities and a greater need to invest than Landstar…show more content…
J.B. Hunt used a total of $297 million in financing activities, which is a large increase from the $13 million used in 2014 (10-k, 22). With more cash at their disposal from operating activities during 2015, J.B. Hunt were able to use that cash on financing activities since they ended up using less cash in investing activities than the prior year. Therefore, they purchased more treasury stocks and they repaid more of their long-term debt than the amount of debt that they issued during the year (10-k, 22). Landstar’s use of cash on financing activities are similar to that of their competitor’s during 2015. Landstar used $254 million during 2015, an increase from the $112 million used during 2014 (LSTR 10-k, 39). Like J.B. Hunt, Landstar had more cash at their disposal and they were able to use some of that money to purchase more treasury stocks. Also, since Landstar did not use much of their cash on investing activities, they had more to spend on financing activities. This represents the biggest difference between the two companies regarding their cash flow. Due to Landstar being asset light, they generate less cash from operating activities and they use more of that cash on financing activities since they do not have much of a need to invest. J.B. Hunt generates a large amount of cash from operating activities, which they use mostly on investing in capital expenditures
Get Access