Column E. To further illustrate the workings of the working capital and cash flow formulas, we will have Bubba show up early to pay Bob.
- Balance Sheet - Accounts Receivable (E28). A hard code reduction to A/R takes it to zero. (step 6 will begin to model A/R)
- Cash Flow Statement - A/R (E59). The formula automatically increases cash because of the decrease in the current asset. A decrease in assets “generates” cash just like an increase in assets uses cash. What really happened is Bubba showed up with $500 cash and Bob tore up the IOU.