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.

  1. Balance Sheet - Accounts Receivable (E28).  A hard code reduction to A/R takes it to zero.  (step 6 will begin to model A/R)
  2. 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.