Direct Operating Cash Flow Statement Make sure you read the pdf linked above Cash received from customers Cash (paid) to suppliers [Put minus sign (-) before a number to be subtracted)] |:| Cash (paid) for salaries [Put minus sign (-) before a number to be subtracted] Cash (paid) for insurance [Put minus sign (-) before a number to be subtracted] |:| Cash received as interest Cash (paid) for interest [Put minus sign (-) before a number to be subtracted] Cash (paid) for taxes [Put minus sign (-) before a number to be subtracted] Checks Year 1 Year 2 Year 3 Steps C4: Direct OCF - Indirect OCF= 0 13 Inputs Year 1 Year 2 Year 3 Income statement Sales 1000.00 1100.00 1345.00 COGS 145.00 234.00 213.00 Salary expense 200.00 298.00 712.00 Insurance expense 257.00 289.00 324.00 Depreciation expense 134.00 110.00 89.00 Interest income 4.43 11.61 19.67 Interest expense 5.64 13.20 16.47 Tax rate 25.00% 25.00% 25.00% Indirect OCF Adjustments Adjustment due to depreciation expense 134.00 110.00 89.00 Adjustment to reconcile NI to OCF due to (increase) decrease in receivables: A 192.00 -55.00 71.00 increase (decrease) in deferred revenue: L 54.00 9.00 19.00 (increase) decrease in inventories: A -49.00 -28.00 29.00 increase (decrease) in accounts payable: L 45.00 19.00 -18.00 increase (decrease) in accrued salaries: L 67.00 34.00 -42.00 (increase) decrease in prepaid insurance: A -38.00 -19.00 21.00 increase (decrease) in taxes payable: L 3.50 -2.00 1.80 Income statement Year 1 Year 2 Year 3 Sales Given COGS Given = Gross profit Gross profit = Sales - COGS Salary expense Given Insurance expense Given -EBITDA EBITDA = Gross profit - sum(Salary expense: Insurance expense) Depreciation expense Given Operating income 5 EBIT = EBITDA - Depreciation interest income 31 Given Interest expense 34 Given =EBT EBT = EBIT + Interest income - Interest expense Tax expense 37 EBT*Tax rate = Net income Z Subtotal Indirect cash-flow statement Year 1 Year 2 Year 3 Net income Start with net income Adjustment due to depreciation expense 29 C4 Add back depreciation Adjustment to reconcile NI to OCF due to (increase) decrease in receivables: A 41 (Change) in receivables increase (decrease) in deferred revenue: L Change in deferred revenues (increase) decrease in inventories: A (Change) in inventories increase ( decrease) in accounts payable: L Change in accounts payable increase (decrease) in accrued salaries: L Change in accrued salaries (increase) decrease in prepaid insurance: A (Change) in prepaid insurance increase (decrease) in taxes payable: L Change in taxes payable Operating cash flow NI + AdjustmentsDirect Operating CFS Year 1 Year 2 Year 3 42 C4 45 C4 11 16 Sales + Adjustment for change in receivables on the indirect OCF + Adjustment for change in deferred revenue on the indirect OCF = Cash received from customers (COGS) + Adjustment for change in inventories on the indirect OCF = (Purchaszes) + Adjustment for change in payables on the indirect OCF = Cash (paid) to suppliers (Salary expense) + Adjustment for change in =alary payable on the indirect OCF = Salaries (paid) (Insurance expense) + Adjustment for change in prepaid insurance on the indirect OCF Insurance (paid) Interest income (Interest expensze) (Tax expense) + Adjustment for change in taxes payable on the indirect OCF = Taxes (paid) Receipts + (Payments)