For accounting whizzes

Why do adjustments for changes in working capital items on the cash flow statement always differ slightly from the actual changes you calculate when comparing 2 balance sheets?

I've always used the figures calculated from balance sheets for when calculating FCF, but never really understood why that method was preferred and considered more appropriate than using the adjustments provided on the cash flow statement.

 

There will be other adjustments that will not be reflected in the YoY difference of Balance Sheets, but are incorporated into the Operating Cash Flow Statement. So yes, whilst the definition of OCF (can be calculated as) is PAT + Non Cash Expenses plus the delta in WC, in reality, there are a whole host of other adjustments a company can make (ESOP expense etc.), which give the discrepancy between the 2 figures (the actual vs. calculated).

 

yeah i wasn't referring to other random adjustments to the OCF calc, but rather comparing specific working capital adjustments on the cash flow statement versus the difference of two balance sheets.

for instance, on AAPL's latest 10K (https://www.bamsec.com/filing/119312514383437?cik=320193), the CFS shows accounts receivable increasing by 4,232 in the year ending 9/27/14. but if actually you calculate the change from the accounts receivable account on the balance sheet you get 17,460-13,102 = 4,358

it's never usually a big difference, but just a discrepancy i've always accepted as OK without really knowing why...

 

Accusantium eaque similique cum rerum exercitationem. Commodi maxime aut ipsam perferendis eum vero. Porro rem facere ipsa quo non et sed. Ut facere inventore et occaecati.

Voluptatem ad veritatis commodi vel delectus sit porro. Molestiae a adipisci ut est soluta minus et.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
kanon's picture
kanon
98.9
6
CompBanker's picture
CompBanker
98.9
7
dosk17's picture
dosk17
98.9
8
DrApeman's picture
DrApeman
98.9
9
GameTheory's picture
GameTheory
98.9
10
bolo up's picture
bolo up
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”