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Posted: 21/Jul/2009 at 12:55pm
Hi Subhankar
One way to improve the operating cash flow is recalssify Accounts receivable(Current Asset) as long term asset and remove from the current asset portion.This will show reduction in Current Asset(Trade Accounts receivable) compared to previous year.Reduction in Account receivable means that much money is recieved.But in actual the company has just reclassifed a Trade Accounts Receivable to long term asset.This will improve the Operating Cash flow.
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Posted: 21/Jul/2009 at 2:23pm
Originally posted by Kishor
Hi Subhankar
One way to improve the operating cash flow is recalssify Accounts receivable(Current Asset) as long term asset and remove from the current asset portion.This will show reduction in Current Asset(Trade Accounts receivable) compared to previous year.Reduction in Account receivable means that much money is recieved.But in actual the company has just reclassifed a Trade Accounts Receivable to long term asset.This will improve the Operating Cash flow.
I hope you understands what i am putting accross.
reagrds
Kishor
Kishor
Do you know of the names of any companies who have made such adjustments?
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Posted: 21/Jul/2009 at 2:52pm
I do not think any company would actually do this. This is so obvious even to the naked eye!!!
Originally posted by Kishor
Hi Subhankar
One way to improve the operating cash flow is recalssify Accounts receivable(Current Asset) as long term asset and remove from the current asset portion.This will show reduction in Current Asset(Trade Accounts receivable) compared to previous year.Reduction in Account receivable means that much money is recieved.But in actual the company has just reclassifed a Trade Accounts Receivable to long term asset.This will improve the Operating Cash flow.
I hope you understands what i am putting accross.
reagrds
Kishor
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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Posted: 21/Jul/2009 at 2:53pm
Cash flow is dependent on actual movement on cash so maybe dividend declared but not paid would come under the P&L but not in the cash flowstatement.
You can find a difference in taxes paid and expensed for also.
Originally posted by subu76
Hi Accountants on this board.....Kindly help me figure this out:
SRF
Shares outstanding = 6 cr dividend/share=Rs 10
Only interim dividend was paid.
Then what explains the difference between 1 and 2:
1. In P&L: Interim Dividend= 62 cr
2. In cash flow statement under financing actitvity:
Dividends on equity share capital =48 cr
This is true for all annual reports .. but why is this mismatch?
Are there some shares on which no dividend is paid?
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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Posted: 21/Jul/2009 at 3:52pm
Hi Rapidriser Sir
I am not aware of any such companeis which have done that.I was just saying that by reclassfiying the CA to long term asset ,you can increase the operating cash flow.
it is not very difficult to do the reclassifcation.i have seen in many Annual reports 'Accounts receivable others".What is this "others".They may classify it as Long term advances and loans given.But we do assume such things will be objected by the auditors.But you never know.What I strongly believe is the cash flow was superbly manupulated by Enron otherwise how they were able to hide all the problems.But how they did i have no idea.
But this reclassification wont affect the total cash flow.Only the operating cash flow will get improved.
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Posted: 21/Jul/2009 at 4:55pm
Interesting. can anyone put alink to what ENron did with their cashflow?
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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