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...
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