Question

Identify two techniques for shifting cash inflows to the operating section of the Cash Flow Statement....

Identify two techniques for shifting cash inflows to the operating section of the Cash Flow Statement.

What can investors watch for in order to identify and assess one of these techniques?

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Answer #1

Following technique can be used by the companies -

1. Treating operating expense as Asset and shifting it to balance sheet and also under investing section of the cash flow.

2. Aquiring other companies - It effect the investing and financing activity however direct ipmact can be noticed in Operating activity as the cash balance and sale figures is increased .

Investor should look into the balance sheet to identify any large capital investment that has skipped the operating section of the cacsh flow. Also investor can check the spike in the capex by the company.

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