USA Question regarding income and CF statement help plz

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Hi everyone,

I am trying to figure out what's going on with the CF statement of the company I am analyzing. Indeed, I don't understand what they have done with some elements of the CF and income statement. Accounting principles used are US Gaap.

I attached the income statement, the CF statement and the notes related to the entries I will talk about. It is a listed company so it doesnt have to be anonymous.

1) In "Adjustments to profit" in the CF statement, why did they put "Financial Income" as a negative number and "Financial expenses" as a positive one? (I suppose it's an adjustment but I still dont understand the maneuvering)

2) In "Other cash-flows from operating activities" in the CF statement you will find interest paid and interest received, which are financial expenses and financial income respectively. So I suppose those numbers are somehow related to the ones above?

I need to insert numbers in my software but with these entries I don't know how to proceed...

Thank you very much for your help!!

Martin
 
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Counterofbeans

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First of all, looking at this (Spanish) company Statement of Cash Flow (SoCF) was painful, even though they are "U.S. GAAP" compliant. I literally shake my head at some the things they do/did. For instance, they don't start with "Net Income," (which they refer to as, "profit for the year") which baffles me. I have very little experience with international companies of this nature, but not starting with Net Income makes me say, "DUH."

Further, I am not a fan of how they are describing their changes, especially taxes.

All they needed to do is show taxes and interest paid as Supplemental Disclosures (at/near the bottom of the SoCF) and they not only would have been compliant, but also much easier to read.

Instead, they do themselves no favors, start with pre-tax income and flush tax provision and payments through the body of the operating portion of the SoCF. What on earth for? To make it more confusing?

Success!!

Lastly, I'm not a fan of how they subtotal each section, with such total on the top of the listing.

Overall, it's an eyesore to look at.


1) In "Adjustments to profit" in the CF statement, why did they put "Financial Income" as a negative number and "Financial expenses" as a positive one? (I suppose it's an adjustment but I still dont understand the maneuvering)
While I have no idea how their business works, I can explain to you very easily why they are doing this:

Those two lines items, in and of themselves, are saying that they are non-cash gains/losses included in Net Income (NI). This is precisely why the income is reducing NI, while the expenses are increasing NI.

I have no desire to look at their balance sheet, but are these line items shown there? If they are L/T assets/liabilities, I would (in general) expect the changes to be specifically earmarked on the SoCF, as they are likely something that needs to be identified.

I can guarantee you though that they had cash flows related to these items, but they are shown on different line items on the SoCF

2) In "Other cash-flows from operating activities" in the CF statement you will find interest paid and interest received, which are financial expenses and financial income respectively. So I suppose those numbers are somehow related to the ones above?
See comment above. These line items appear to be actual cash flows out/in. Other line items above, like the aforementioned financial income/loss and/or some of the changes in working capital, etc. are making this difference up so they can report the actual cash out flows related to these line items.

Like I said above, I'm not a fan at all of this presentation. I find it extraordinarily unusable and confusing.
 
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Thank you for the clarification! And a big thank you for your time. Very appreciated.

Martin
 

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