An increase in other liabilities has a positive impact on cash flow from operating activities, and vice versa.Ĭhanges in Working Capital Changes in Working Capital represents the sum of: Loan Loss Provision (for banks)Accounts Receivable (for insurance companies, industrial companies and utility companies)Prepaid Expenses (for insurance companies and utility companies)Other Assets (for banks, insurance companies and utility companies)Accounts Payable (for insurance companies, industrial companies and utility companies)Accrued Expenses (for insurance companies, industrial companies and utility companies)Payable/Accrued (for banks, insurance companies, industrial companies and utility companies)Taxes Payable (for banks, insurance companies, industrial companies and utility companies)Other Liabilities (for banks, insurance companies, industrial companies and utility companies)Other Assets & Liabilities, Net (for banks, insurance companies, industrial companies and utility companies)Investment Securities, Gains/Losses (for banks and insurance companies)Loans, Gains/Losses (for banks)Other Real Estate Owned (for banks)Sale of Loans (for banks) Other Liabilities Other Liabilities represents changes in other liabilities during the period. An increase in income taxes payable has a positive impact on cash flow from operating activities, and vice versa. Taxes Payable Taxes Payable represents changes in taxes payable during the period. When not delineated separately, Accrued Expenses is classified as Accounts Payable/Accrued. An increase in accrued expenses has a positive impact on cash flow from operating activities, and vice versa. An increase in accounts payable has a positive impact on cash flow from operating activities, and vice versa.Īccrued Expenses Accrued Expenses represents changes in accrued expenses during the period. An increase in prepaid expenses has a negative impact on cash flow from operating activities, and vice versa.Īccounts Payable Accounts Payable represents changes in accounts payable during the period. Prepaid Expenses Prepaid Expenses represents changes in prepaid expenses during the period. An increase in inventories has a negative impact on cash flow from operating activities, and vice versa. Inventories Inventories represents changes in inventories during the period. An increase in accounts receivable has a negative impact on cash flow from operating activities, and vice versa. Non-Cash Items Non-Cash Items represents the sum of: Accounting ChangeDiscontinued OperationsExtraordinary ItemsUnusual ItemsPurchased R&DEquity in Net Earnings/LossOther Non-Cash Items.Īccounts Receivable Accounts Receivables represents changes in accounts receivable during the period. Other Non-Cash Items Other Non-Cash Items represents noncash operating activities other than those included in: Depreciation/DepletionAmortizationDeferred TaxesAccounting ChangeDiscontinued OperationsExtraordinary ItemsUnusual ItemsPurchased R&DEquity in Net Earnings/LossOther Non-Cash Items also includes reversal of gains (losses) on the sale of fixed assets, which is intended to avoid double counting of gains/losses on the sale of noncurrent assets, such as fixed assets, long-term investments in securities, etc. Because the operating section of the cash flow pursues changes in cash flow from operating activities, any unusual gain/loss included in net income computation needs to be reversed. Unusual Items Unusual Items is applicable only if Net Income/Starting Line is income after gains/losses from unusual activities. Depreciation/Depletion is usually the largest non-cash expense factored into net income under the Indirect Cash Flow Method.ĭeferred Taxes Deferred Taxes represents income taxes, accounted for in a company’s net income computation on its income statement, but not affecting the cash flow position. Depreciation also represents the amount of expense charged against earnings by a company to write off the cost of a plant or machine over its useful life, giving consideration to wear and tear, obsolescence and salvage value.ĭepreciation/Depletion Depreciation/Depletion represents the sum of Depreciation and Depletion. Net Income/Starting Line Net Income/Starting Line is the first line of a cash flow statement when a company employs the Indirect Method in the operating cash flow section.ĭepreciation – Supplemental Depreciation – Supplemental represents total non-cash depreciation expenses.
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