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

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

 

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.

 

regards

Kishor