Operating Cash
Cash Flow Statement
- Change in excess cash or revolver are outputs and not categorizations
- Cash flow statement’s job is to resolve the movements on the balance sheet.
- Reminder: CAPEX (investing section that will impact operating section) is an outflow of cash; depreciation (operating section adjustment) makes PPE go down doesn’t affect cash so would have to be re-balanced
- Asset and cash have an inverse relationship…More debt more money (positive direction)
- a -3 on the cash flow statement is a +3 in the balance sheet b/c we’re taking on +3 debt to increase our cash by +3 as an asset
- Timing of interest
- When in doubt, you can average the beginning and ending balance
- If you have certainty that cash flows in or out at the end of the year, then you can choose accordingly
Amortization: most companies don’t have a CAPEX equivalent for intagnibles. So we don’t have a BASE approach (often) for a company
Interest income during the year = avg cash balance from starting to ending balance.