Other Assets & Liabilities, Net Other Assets & Liabilities, Net represents the changes in the combined sum of assets and liabilities when a company reports these totals as a single line. 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. Payable/Accrued is utilized when a company does not delineate between Accounts Payable and Accrued Expenses. An increase in accounts payable and accrued expenses has a positive impact on cash flow from operating activities, and vice versa. Payable/Accrued Payable/Accrued represents changes in accounts payable and accrued expenses during the period when a company does not delineate the two components.
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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