Christopher Browne
Mon, 05 Feb 2001 21:24:58 -0600

On Mon, 05 Feb 2001 15:32:49 CST, the world broke into rejoicing as (Bill Gribble)  said:
> On Mon, Feb 05, 2001 at 02:59:27PM -0600, wrote:
> > someone needs to write a 'cash flow' report, which is missing in the
> > current version.
> Actually isn't it the other way around?  I would have thought only
> income and expense accounts would be part of cash flow. 

Hmmm...  Sort of, kind of.

A good cash flow statement should involve just those transactions that
touch cash; what you'll care about in analysis is the other sides of
those transactions.

It's _not_ about "incomes and expenses;" it's about "receipts and

Note that if an expenditure winds up going into buying an asset, or
paying off a liability, you _DO_ want to report that, as well as the
converse of receiving cash due to selling an asset or taking out a loan.

The thing that should get "thrown away" is the set of transactions that
solely deal with accruals; a "depreciation expense" that merely accrues
depreciation doesn't affect cash flow, at least not this year, and so
is properly ignored.

But a "statement of cash flow" will indeed include the impact of asset,
liability, and equity transactions that actually result in cash flowing
in and out.

The net result is that this sort of statement tends to be far and away
the most difficult sort of report to precisely interpret.  But if you've
got a DotCom that's awash in red ink, wasting great gobs of money on
funky furniture, it's the cash flow statement that will most clearly
show this...
(concatenate 'string "aa454" "")