Hey WSO, I've been having trouble learning why would you add or subtract from the cashflow statement. I understand stuff like, add back depreciation/amortization but stuff like deferred income taxes. How should I know when it adds or subtracts something from net income and thus affects cf from operations?
Trending Content - Investment Banking Forum
| +324 | UBS Tech MD hires Son (from no-name college) as an Intern | 54 | 14h |
| +89 | [Official] 2026 IB Analyst Bonus Megathread (with 2025 Consolidated Pay and Perks/Benefits) | 12 | 1d |
| +75 | Evercore Intern Seizure | 16 | 14m |
| +54 | Is DCM actually underrated ? | 20 | 11h |
| +46 | Are all Tech / TMT groups sweaty? | 33 | 6h |
| +41 | UBS Groups Ranked by Future Outlook | 20 | 5d |
| +41 | JPM M&A is Gone??? Purely Coverage Banking??? | 20 | 19h |
| +37 | Am I behind? 31 Year Old Analyst | 9 | 23h |
| +36 | Losing my personality in Banking | 5 | 1d |
| +32 | UVA McIntire vs Cornell Dyson for IB | 19 | 3d |
Career Resources
if it affects taxes it affects net income
That's not what I mean. Sometimes you subtract or add from net income on the CF statement, how do you know if something is a subtraction vs addition? Also not everything that affects tax/net income gets readded/subtracted later on on the CF statement.
If it's a non-cash item then it gets resolved by being added back or subtracted in the walk-down from NI to CFO. Generally speaking, something that increased your NI from a non-cash perspective will get subtracted between NI and CFO, whereas something that decreased your NI from a non-cash perspective, then it will get added between NI and CFO. It's ultimately the same principle as why you add back D&A.
You see deferred income taxes show up a lot between NI and CFO because the tax number in the IS is usually just an accrual number and often times is not representative of what a company is actually paying in cash tax estimates each month.
Corrupti ad quo ut sit est sint sit illo. Quos molestias nulla quam dicta amet nihil. Quas dolorem cupiditate sint explicabo velit. Est sit culpa architecto aut.
Iusto doloribus vero ullam. Et et libero ea eaque reiciendis similique modi qui. Minima et est rerum praesentium quam quasi. Impedit incidunt voluptas voluptas eos iste. Ut laudantium perspiciatis dolores.
Est aut omnis rerum aut vitae. Ex aut quia ab facere et aut quia. Consequatur rerum id accusamus quia quo.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...