So this is what's happening: AR in 2020 = 5 AR in 2021 = 3 Change in AR on the CF = 4
I'm doing a case study for a publicly traded company, and I know the disconnect is due to acquisitions, and there's no feasible way to reconcile it.
So now, I'm not sure if I should say screw it and use the historical CF or do the calculation myself. Thanks in advance.
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In my experience historical CF and BS never reconcile properly. Most people that look at public companies input historicals as they report them or hardcode, for example, the reported operating CF and use the "other" line as a plug to make up the difference
The audit should tie out tho and if it doesn’t you can usually tell why by the footnotes
Could you clarify, are you saying I should manually calculate the Cash Flow an then add a line item called "other" that reconciles the difference between Historical CF and the manually calculated CF?
I don't think the firm I'm doing a case study for would approve of that unfortunately...
Typically don’t reconcile due to rounding. Just hard code it or adjust via new line item like above comment.
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