Available modeling methods
| Method / input | Behavior |
|---|---|
| Indirect presentation | Net income, non-cash add-backs and changes in operating balances. |
| Direct presentation | Customer receipts, supplier and operating payments, interest and tax payments. |
One set of underlying cash flows
Both presentations use the same accounting result. D&A is added back in the indirect view, while receivable and inventory increases consume cash and payable increases release cash. Supported other balance movements retain their operating, investing or financing classification. Do not add the same movement again as a manual cash-flow item.
FCF and DCF cash flow differ
The statement FCF is CFO minus capex, after modeled interest and tax. The DCF uses unlevered FCFF built from EBIT and operating tax. Borrowing can increase closing cash without improving FCF. Dividends reduce financing cash flow and equity, not operating profit.
Trace an investment
Add an investment in the chosen forecast year. Check the investing outflow, PP&E addition and later depreciation. If it creates a cash deficit, inspect the explicit funding line and subsequent interest. What-If can isolate this transaction without replacing the operating plan.
Documents the current implemented behavior. Example assumptions are not market data.