The Goodyear Tire & Rubber Company (GT) Cash Flow Statement

The OCF/NI ratio is highly volatile, ranging from -4.68 to 14.40, indicating that cash generation is not a reliable function of earnings. The large positive working capital changes in Q4 quarters (e.g., $1.3B in 2025Q4) suggest seasonal inventory and receivable liquidation, not operational improvement. Investors should monitor whether these swings reflect genuine cash conversion or timing distortions.

FCF margins have been consistently negative, averaging around -8% over the period, with only Q4 quarters showing positive FCF due to seasonal working capital releases. The cumulative FCF deficit suggests the company is not generating sufficient cash to cover its capital expenditures, let alone service debt. This trajectory implies continued reliance on external financing or asset sales to bridge the gap.

CapEx/Revenue has fallen from 7.0% to 3.9%, suggesting a deliberate reduction in investment, possibly to preserve liquidity. However, this may indicate underinvestment in maintenance, which could impair long-term competitiveness. The absolute CapEx levels remain high relative to the negative FCF, implying that even reduced spending is not sustainable without improved operating cash flow.

The large negative working capital changes in Q1 quarters (e.g., -$725M in 2026Q1) suggest significant cash outflows for inventory build-up or receivable increases, while Q4 quarters show massive inflows. This pattern may reflect the company's high fixed-cost model and need to align production with demand, but the magnitude of swings is concerning. It suggests that operating cash flow is heavily influenced by timing, not underlying profitability.

The absence of shareholder returns and minimal acquisition activity suggests that all available cash is being directed toward debt reduction or operational needs. The $470M acquisition outflow in 2025Q4 may relate to the Cooper integration or divestiture activities, but the overall deployment strategy appears conservative. This aligns with the strained balance sheet and the need to address the 2.13 debt-to-equity ratio.

The gap between net income and operating cash flow is largely due to non-cash charges like impairments and depreciation, but the positive cumulative OCF is misleading because it is driven by working capital releases, not sustainable earnings. The negative net income suggests that the company is not generating economic profits, and the cash flow is not sufficient to cover capital expenditures, leading to a cumulative FCF deficit of over $3B. This divergence indicates that the company is consuming cash, not generating it, on a sustainable basis.