Projecting out Cash Flow Statement
(Chimp, 4
Points)
on 2/27/12 at 8:38am
If you forecast other non-current assets and liabilities (ie % of sales), then where does that tie into the cash flow statement? Do you take the change and put it in Investing activities?
Depends. PP&E is CapEx (CF
Depends. PP&E is CapEx (CF from Investing). SHE comes from dividends and retained earnings (net income). Varies.
is this sadmunky posting
is this sadmunky posting under another name? do yer own homework ya lazy prick.
As bonobo said, it really
As bonobo said, it really depends because we don't know what the "other" component represents - it could be an operating, financing, or investing activity. So...look at the footnotes to try to understand what these aggregated line items are comprised of. If you have no insight as to the nature of these line items, look at historical results over the last few years and see if they show some correlation to revenue growth. If not, I would consider straight-lining.
Keep in mind that if you're growing by sales (as opposed to straight-lining) you are implicitly saying that these assets and liabilities are tied to operations somehow. In other words, as the company generates more revenue you expect these items to grow correspondingly. That makes sense if they are operating related items like deferred rents, or deferred taxes, for example, but not if they are investments in other businesses.
But if you've done all of the research and still have not found anything, just include it in financing or investing activities (that's often where these line items end up being) and comment that there are no disclosures about the nature of the items.
Matan Feldman
Founder, Wall Street Prep
Learn Financial Modeling