If you remember we had also discussed the BASE Rule where we had discussed the generalized methodology of creating the closing accounts of the balance sheet from the other statements. It is time we put all our basic knowledge into action!
Joining the dots
Now that we have the basic elements of the cash flow statement with us and the pre requite knowledge to create the cash flow statement, we would find the real cash at the end of the year and ensure that it balances with the cash in the balance sheet.
Creating the final Cash Balance for Facebook
Today we calculate the closing cash balance for Facebook in the cash flow statement and ensure that it balances the cash in the balance sheet. Please note that this balancing is a basic error check in the model. If you are not getting it right, it is time to check your old numbers.
Remember: Closing Cash Balance = Beginning Cash Balance + Net Changes in Cash Flow
Try on your own and calculate the closing cash balance for the Facebook and see whether the resultant figure is the one that is given in the historical balance sheet.
2moro we would release the cash flow statement of facebook. You would see that the closing cash balance calculated in the Cash Flow Statement is same as the Cash in Facebookâ€™s balance sheet. Tomorrowâ€™s integrated linked model would include all financial statements for facebook
Cash Flow Statement for Facebook (To be released tomorrow)
Once we have the Cash Flow Statement in the model, we would clearly see the linkage between P&L, B/S and the cash flow statement. CUL8R!!
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Pankaj Baheti is a CFA Level III Candidate currently working with Pristine. Prior to Pristine, he was working with Achi Group. He has done his Post Graduate Diploma in Management and loves trekking in the hills of Arunachal.
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