Table: Pumping Up Cash Flow
MANEUVER WHERE TO LOOK HOW IT WORKS
SELLING ACCOUNTS Footnotes By selling the bills customers owe, RECEIVABLE companies accelerate their cash collections.
CLASSIFYING Footnotes The checks are gone. But because they OUTSTANDING haven't been cashed, they are counted CHECKS AS in Accounts Payable--which inflates ACCOUNTS PAYABLE operating cash.
TRADING Cash-flow For nonfinancial companies, counting SECURITIES statement proceeds from securities trading in operating cash can make operations look better than they really are.
CAPITALIZING Cash-flow Capitalized costs are deducted over many CERTAIN EXPENSES statement, years instead of when incurred. If com- footnotes, and panies capitalize what should be an balance sheet expense, operating cash will look better.