Hi everyone,
I was going through a small European company's Cash flow statement and found it to be very weird. At my college, I looked at a number of Cash flow statements but none were foreign firms.
For its Cash flow from operating activities, the company captures movement in operating assets and liabilities including non-current assets. I have always thought oif change in working capital as Change in (CA exluding-cash)-(CL-debt).
Can anyone tell me why would this company include non-current assets/liaibltiies here as well?What really makes me confused is that since Cash flow statement is used to get at Cash flow at end, surely if I dont include the non-current assets/liaiblities then I would get a different Cash at end of period.
I am attaching a screenshot so you can see the Cash Flow Statement.
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Welcome to Europe, where American investors embarrass themselves daily.
Hint: this is mainly due to the facto that they start here their CF with the profit for the year. Whereas you must be used to starting from EBIT or a similar figure
I'm an American who lived in London when they rolled out the IFRS standards. Check them out with regard to how they compare to GAAP. There are a few handy guides out there if you'll be doing euro or international deals in general. It's not wildly different but some of the small things will make you doubt your financial intelligence
@"@"Oreos"
I checked Investopedia and they seem to be using the same definition as I am.
Calculating Cash flow from Operations Here are the steps for calculating the cash flow from operations using the indirect method: 1.Start with net income. 2.Add back non-cash expenses. ◦(Such as depreciation and amortization) 3.Adjust for gains and losses on sales on assets. ◦Add back losses ◦Subtract out gains 4.Account for changes in all non-cash current assets. 5.Account for changes in all current assets and liabilities except notes payable and dividends payable.
I do not see any mention of non-current assets and labilities. Can you guys offer some advice here?
@"JJSaurel"-Here too they start from NetIncome
@"Dingdong08"-I see some differences between IFRS/GAAP but I havent seen anything that would suggest the inclusion of non-current assets and liabilities
Check link below: http://www.investopedia.com/exam-guide/cfa-level-1/financial-statements…
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