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Google "Cash Flow Statement" real quick.
Are you trying to do a DCF without any knowledge of accounting?
Sorry. What I meant to say was that I can't get the change in AR to match the CF amount. Everything else matches up fine. Used the gross amounts and net and neither worked.
You're either mismatching time periods, or looking at inconsistent data. Make sure to use Edgar when looking at the financials.
I wouldn't worry about it, and just use the change in working capital for that period found on the cash flow statement.
There are reasons that change in A/R in CFO would not match the change on the balance sheet. For example, if a company acquires another, the A/R accounts would be merged but the change in A/R resulting from the acquisition would not be embedded in cash flow from operations. Another possible reason could be FX adjustments
Generally for complicated companies it's likely you are going to have many issues recreating the SCF from the balance sheet. You'll run into problems as a result of a) acquisitions, particularly non-cash acquisitions, which may not have any effect on the SCF, b) non-cash investing/financing activities [i.e., buy a building by borrowing directly from the seller], c) FCTAs [fx adjustments], and d) other OCI adjustments [for example, you'd have trouble reconciling the securities account if an unrealized loss had occurred].
Good analysis
Accounts Receivable Question (Originally Posted: 03/29/2010)
Hi,
I am working on a DCF model, and trying to project upside/downside cases. Couple of templates I have list a high days sales outstanding (and thus accounts receivable) numbers for an upside case, and low days sales outstanding as a downside case. Since AR is a use of cash, shouldn't a low AR be an upside case and a high AR be a downside case? Thanks for your help.
You are right. Also, I would add that the absolute value of AR is not really an issue. It's the change in AR that matters.
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