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Profissional Documentos
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IS
BS
FCFE
NCC
FCFF
27.a
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Income Statement
Balance Sheet
Free Cash Flow to Equity
Noncash Charges
Free Cash Flow to the Firm
CFO
CFI
CFF
Acquisition of debt & equity investment (other than trading securities) & loans to others are (investing).
27.b
Noncash investing & financing activities are not reported in CFS.
These must be disclosed in either footnotes or supplemental schedules.
27.c
U.S.GAAP
27.d
IFRS
Two CFS methods (direct & indirect), both permitted under IFRS & U.S.GAAP, direct
method use is encouraged. Difference is due to presentation of CFO.
Direct Method
Converts an accrual basis I.S into cash basis I.S
Indirect Method
Net income is converted to CFO by making adjustment for
transactions that affect N.I but non cash items, nonoperating items, and for net changes in operating accruals.
Disclosure Requirements
U.S.GAAP
IFRS
27.f
CFO
Direct Method
Indirect Method
Net income.
G/L resulted from financing or
investing CF.
+ Noncash charges &
- Non cash revenue.
operating assets (-) while are (+)
Operating liability (+) while are (-).
CFI
Calculated by examining change in gross asset accounts that result from investing
activities.
Cash paid for new asset = ending gross asset + gross cost of old assets sold
beginning gross assets.
Cash from asset sold = B.V of asset G/L on sale.
CFF
27.g
Adjust I.S item for its corresponding B.S. account & eliminate noncash & non operating transactions.
Illustrative conversion process of frequently used accounts is:
27.h
Common-size CFS
By expressing each line item as a % of revenue.
Alternatively each inflow of cash as a % of total cash inflow &
each outflow as % of total outflow.
27.i
Free CF measure of cash that is available for discretionary purpose (after covering capex).
If firms that follow IFRS subtracted dividend paid in calculating CFO, dividends must be added
back for FCFF.
FCFF
FCFE