Matching Historical Balance Sheet and Cash Flow Statement Items
Doing a practice valuation, currently trying to match historical balance sheet items to cash flow statement items. I've encountered a problem where, historically, changes in the balance sheet are not matched by their equivalent items on the cash flow statement - the items I've noticed so far are financial assets, receivables and assets held for sale.
I suspect that this could be because of this company's substantial foreign operations: looking in the notes, it says that the balance sheet items held in overseas currency are converted to the domestic currency on the day of balancing, while Income and CFS items are converted when the transactions take place. Furthermore, they have substantial hedging operations - as they are not based in the US, and I suspect these financial products are USD denominated - this may cause the same problem.
What I want to know is,in a professional setting, can I get away with not having historicals match up perfectly?
Bump
It's an exercise in masochism to match up the historical cash flow statement with changes in balance sheet accounts. There are many reasons why the numbers don't equate, with the most common culprit being M&A. Companies generally don't disclose enough info for you to bridge the numbers perfectly, so it's better to just not bother with it.
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