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Moody's Associate Analyst Interview Question

I interviewed in New York, NY and was asked:
"Tell me how you get to Chasflow from Operations departing from Net Income in a Cashflow statement."
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Part of a Associate Analyst Interview Review - one of 101 Moody's Interview Reviews

Answers & Comments

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Take the Net Income from the income statement and add back the depreciation (non cash item), then from the balance sheet add the change in working capital (w/c) which is the difference in current assets (ca) and current liabilities (cl) from the prior year and this should give you the cash flow from operations..Note: You add to the above equation only when ca < cl otherwise you subtract, as this is ca is the cash that was expected to be received from vendors etc and has not yet received.
- Sam on Oct 27, 2011

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