Question about foreign exchange rate adjustment in cash flow statement

Hii hope everyone's doing well. When you have some time, I had some questions about the FX adjustment in cash flow:

  • How do you project this line in-depth in the cash flow statement? E.g. company i'm looking at has 60% revenues coming internationally so trying to project it as accurately as possible
  • What's the offsetting account in balance sheet? Or how do I make it balanced in the balance sheet considering any change in the line in the CFS would make the balance sheet imbalanced 
  • Sometimes FX adjustment or impact appears in income statement - what should I do in this case?

Would highly appreciate your help / advice. Thank you so much!!

 
Most Helpful

Apologies for the formatting; on phone…In my models I have fx impact in the rev build; OUS revs are forecasted off constant currency growth. Usually companies will guide (or give some color) on where they think fx will shake out for the year in terms of top line impact.

Will do the same on the pnl for the gm line. Usually management will at least tell you if fx is a headwind/tailwind here and you can use ur judgement to determine how much. The “output” you get to EPS, EBITDA should always be the adjusted numbers for your historicals.

My guess is fx would be an adjustment in the non-GAAP reconciliations found in the press releases.

As for the BS, it should flow straight into equity.

How do I forecast it on the CFs? I zero it out — I haven’t given it much thought to exactly how those mechanics work bc there’s a lot of moving pieces and I don’t think it’s overly important. The things investors care about on the CFs in the vast majority of cases are 1. CFO 2. FCF — the fx line impacts neither.

 

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