Tax and interest on cashflow statement

[Jlk]

Hi,

Im wondering why the ‘tax and interest paid’ on the income statement is different from the number shown on the cashflow statement. For example, the annual report of 2018 of the company LeGrand says in the income statement; income tax 301,3 m, but in the cashflow statement it says ‘income tax paid during period’ 255 m.
Which number should i be watching if i want to know how many taxes are paid during 2018?

Thanks in advance.

 

[bklynboy]

Income statement is tax expense - at least under GAAP. Which includes deferred items that do not show up on cash flow statement.

 

[Jlk]

Thank you for your answer.

So if i want to calculate operating cashflow before interest and tax i should add taxes and interest paid as shown on the income statement back to netcash from operations? Am i correct?

 

[bklynboy]

If you want pure cash spend before interest and taxes you cant find that from the income statement since that includes accruals. You need to go into the notes to the financial statements and look at the tax note for taxes paid and there should be a debt note for interest paid. Interest paid though I would usually find in the financing activities and would not be part of the operating cash flow number

 

[Jlk]

hm, it is getting quit confusing for me since i dont have a background in accounting.

If interest paid is not in the operating cashflow number, and free cashflow is calculated (according to google) as operating cashflow - capital expenditures, then where are the interests?

Or should i calculate it like this:
- operating income + depreciation - changes in working capital =operating cashflow
- operating cashflow - capex = free cashflow for firm
- free cashflow for firm - interest paid = free cashflow (shareholders)?

i read a few different approaches in books and on the internet but its not clear to me how to calculate these numbers correctly.

 

[kirby]

The cash amounts paid for interest and taxes are always shown on the bottom of the cashflow statement. The LeGrand cashflow statement also states that interest paid in cash is already included in Cash from Operating Activities.