Interview Question

Interview New York, NY

Tell me how you get to Chasflow from Operations departing

  from Net Income in a Cashflow statement.
Answer

Interview Answer

1 Answer

6

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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