I am trying to build a quarterly operating model for a company that happens to present its consolidated statement of cash flows cumulatively throughout the year i.e. Q1 is the Q1 cash flow, Q2's, however, is Q1 + Q2... and so on.
I didn't think this would be a problem because I assumed that I could keep my model quarterly by subtracting the cumulative Q2 cash flow items from the Q1 cash flow items to arrive at Q2's cash flow. I was wrong. The numbers, by this method, do not tie out.
Have any of you dealt with this before?
Just make your own CF stmt from the changes in the quarterly balance sheet. Simple enough to do .
Thanks. I will probably end up doing that--though, there are still some discrepancies with items like D&A and comp & benefits being partially comprised of non-cash amounts. Is it generally acceptable in the ER industry to create your own CF statement?
Don't you have an IS that you can look at to add back depreciation and amortization? Besides that- CF stmt starts at net income- adds back D&A and then adjusts for changes in the BS.
I do. I know of the indirect method of calculating cash flow. But sometimes the IS items don't perfectly align with the CF items e.g. BLK doesn't have a D&A item on the IS but they do on the CF. Also, they have compensation and benefits on the IS but then back some of that out on the CF due to it being partially stock-based.
I'm sure, per your suggestion, I will arrive at something close enough by just doing the best I can with the indirect method.
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