Cashflow using indirect method
Posted: 14 Apr 2023, 08:54
Hi All,
I am trying to make sense of cashflow statement using indirect method. The main challenge is on the "adjustment for non cash item".
I understand that some of the items include depreciation, revaluation gain, income tax, etc. And I can easily solve all the exam questions on paper.
But in practice, when I look at the consolidated statement of a public company, the adjustment can include hundreds of items (beyond depreciation and tax expense). My question is, in practice I wonder if there are any tips or easy way to determine what to adjust, or we have to go through all the P&L items and see which ones are actually affecting BS one by one?
I am trying to make sense of cashflow statement using indirect method. The main challenge is on the "adjustment for non cash item".
I understand that some of the items include depreciation, revaluation gain, income tax, etc. And I can easily solve all the exam questions on paper.
But in practice, when I look at the consolidated statement of a public company, the adjustment can include hundreds of items (beyond depreciation and tax expense). My question is, in practice I wonder if there are any tips or easy way to determine what to adjust, or we have to go through all the P&L items and see which ones are actually affecting BS one by one?
