Wall Street Prep

Welcome back to the Wall Street Prep Quick Lesson Series!

In this video, we'll build a cash flow statement given an income statement and balance sheet in Excel. The accounting here is a simplified presentation of how the three major financial statements are inter-related and lays the foundation of financial statement models in investment banking. Many accounting questions that we see time and again in finance interviews are designed to test the understanding explained in this exercise.

Ready to Model? Before diving in to the videos below, be sure to download this lesson's Excel model template: Cash Flow Statement template.

The Cash Flow Statement, Video 1

The Cash Flow Statement, Video 2

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Dylan
Dylan

Why is "Additional purchases of Intangible Assets" excluded from the CapEx in the CF?

A M
A M

Regarding the decision to put "other long term assets" in investing -- is this somewhat subjective, or are other Long Term Assets always (or 95%+ of the time) put into investing activities?

Olga Skliarova
Olga Skliarova

That was great!!! Thank you.

Job Osagie Amiolemen
Job Osagie Amiolemen

Thank you for the presentation. Please why is dividend payment coming after the calculation of Net Income?

Marko
Marko

Hi, Where would you place loan interest outflow? I assume that loan interest liability is part of notes payable position and as such is part of financing cash outflow. Would it be correct to first adjust operating cf for interest expense and than show actual interest paid under financing cf?… Read more »

Nathan Sunkutu
Nathan Sunkutu

Thank you

Video Time
11.08
Thais
Thais

I understood that if we have an increase in the accounts receivable, means that is a cash that you don't have recognized as revenue. But this doesn't mean that the clients are paying later, if we say that we did the DSO and the average payment still the same from… Read more »

Tariq
Tariq

Hi, why is goodwill (intangible asset) incorporated in the cashflow? Is it because the increase is due to cash out?

Abraham Tetteh Nartey
Abraham Tetteh Nartey

Useful tutorials

Andrew
Andrew

On the first CF video at around 9:51 mark, the instructor says that "if inventory went up, I must have paid cash for it somehow". But couldn't you have bought the inventory on account? And hence there would still be the increase in inventories on the balance sheet but the… Read more »

Video Time
9:51
Cindy
Cindy

What a great course! I learned something very useful. Thank you!

Chibueze Clinton
Chibueze Clinton

I thought since Depreciation has been added back at the cash from operation section it doesn't need to be added to the cash from investing. How's this so?

Gopal
Gopal

Why notes payables are not taken in calculating CFO in Video 1. Notes payable are also current liabilities. What all Current assets and current liabilities should be taken and what not to be considered while calculating Cash flow from operation.

Mariam A
Mariam A

Really enjoyed working through this! I plan on taking the boot camp so wanted to go through the videos as well. I love that it's explained in such simply layman terms!

Supriya Jamdar
Supriya Jamdar

It was awesome, never learned preparing cashflow with reason as why inflow and outflow.
I was hardly able to tally the statements before. After this I don't think I will make mistake.

IHTISHAM IRSHAD
IHTISHAM IRSHAD

Owesome.
Good way to learn cash flow statment.
i am satisfied.

Qedani Dorothy Mahlangu
Qedani Dorothy Mahlangu

Very useful lesson. Looking forward to future lessons.

Grace Agbavitor
Grace Agbavitor

This was definitely in layman's term and I enjoyed it. The explanation was simple, clear and concise.

Hannah
Hannah

This was a great and concise explanation!

Trent Rasmussen
Trent Rasmussen

The template link, is not working. Any way of getting a new link for the cash flow template?

Ziad Qasqas
Ziad Qasqas

Well presented in short way.

Varun Sood
Varun Sood

Hi, I am trying to figure why in the template, you didn't have any separate row under the income statement for any other income /(expense) which might have been earned (incurred) not as part of the operating income but separately. For. eg., if we need to include "Loss on early… Read more »

Maria Caudle
Maria Caudle

I can't wait to get all the video series and put it all to work on my first important deal. It will make me look like an expert once I come into my future client's door.

Best Wishes

jawad hassan
jawad hassan

Professionally formulated and well explained.

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The Wall Street Prep Quicklesson Series

7 Free Financial Modeling Lessons

Get instant access to video lessons taught by experienced investment bankers. Learn financial statement modeling, DCF, M&A, LBO, Comps and Excel shortcuts.