- At “Net Income from the Income Statement”, use net income after tax, or net profit, reported on the company's income statement without adjustment.
- At “Plus – Depreciation and Amortization (I/S)”, use the depreciation and amortization amounts listed in the company's income statement. If the amounts are not specifically listed in the income statement and there are no footnotes or cash flow statements, ask the borrower for the amounts. Enter as a positive number.
- At “Adjustment – Change in Due from Loans to Shareholders (B/S)”, enter an increase in the appropriate balance sheet account, such as Due from Shareholders, as a negative number. Enter a decrease in the account as a positive number. That is, if the amount increases, it represents a cash outflow since the company has loaned money to the shareholders or owners. If the amount decreases, it represents a cash inflow since the shareholders or owners have paid back past loans or converted the amount to a distribution, which you will pick up at the “Less – Distributions, Withdrawals, or Dividends” entry.
- At “Adjustment – Change in Accounts Receivable (B/S)”, enter the change in accounts receivable from the prior period to the current period. If accounts receivable have increased, the change represents a cash outflow. Therefore, enter the amount of the change as a negative number. If accounts receivable have decreased, enter the change as a positive number. If "Unbilled Receivables" are recorded under current assets on the balance sheet, add the amount to "Accounts Receivable" in calculating the change from period to period.
- At “Adjustment – Change in Inventory (B/A)”, enter the change in inventory from the prior period to the current period. If inventory has increased, the change represents a cash outflow. Therefore, enter the amount of the change as a negative number. If inventory has decreased, enter the change as a positive number.
- At “Adjustment – Change in Accounts Payable (B/S)”, enter the change in accounts payable from the prior period to the current period. If accounts payable have increased, the change represents a cash inflow. Therefore, enter the amount of the change as a positive number. If accounts payable have decreased, enter the change as a negative number.
- At “Adjustment – Change in Accrued Liabilities (B/S)”, enter the change in accrued liabilities from the prior period to the current period. If accrued liabilities have increased, the change represents a cash inflow. Therefore, enter the amount of the change as a positive number. If accrued liabilities have decreased, enter the change as a negative number. Accrued liabilities include accounts recorded under current liabilities such as "Accrued Liabilities", "Accrued Expenses", "Accrued Wages and Salaries", "Accrued Bonuses", "Accrued Taxes Payable", “Operating Deposits”, etc.
- At “Adjustment – Change in Other Balance Sheet Accounts”, enter material changes in other balance sheet accounts, such as "Prepaid Expenses", "Deferred Revenue", "Income Taxes Payable", "Deferred Income Taxes Payable". If the account is an asset account, remember that an increase in an asset account is a cash outflow and vice versa. If the account is a liability account, an increase in a liability account is a cash inflow and vice versa.
- At “Current Maturities LTD (prior period)”, enter the amount as a negative number. Do not enter amounts for current maturities recorded in the present period.
- At “Current Maturities Capital Leases (prior period)”, enter the amount as a negative number. Do not enter amounts for current maturities recorded in the present period.
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