If receivables and inventory rise, put a number and a source behind the phrase “cash tied up.” Your output will be a review sheet connecting balance changes, non-operating or non-cash effects, the operating-cash adjustment, and the next disclosure to check. Use the introductory cash-flow guide for the basic profit-to-cash bridge.
1. Collect comparable opening and closing balances
Copy trade receivables, inventory and trade payables from the consolidated balance sheet, retaining the currency, scale and dates. This exercise groups only these three operating items and excludes cash and borrowings. It is not the broader definition of total current assets minus total current liabilities. Add separate rows for material contract assets, customer advances or other operating items.
Do not mix gross and net receivables, or trade payables and accrued expenses. Match the account scope before explaining a difference. An undisclosed adjustment is an unknown, not a zero that can be inserted to complete the sheet.
2. Reconcile the balances before assigning cash effects
This fictional consolidated company represents no actual issuer. All amounts use millions of one arbitrary currency. Assume the notes establish balances added through an acquisition and currency translation, with no other non-cash or reclassification effects. If a real filing lacks this detail, you cannot make this exact decomposition.
| Item | Opening → closing | Raw increase | Acquisition | Translation | Operating increase | Operating-cash effect |
|---|---|---|---|---|---|---|
| Trade receivables | 54 → 79 | 25 | 8 | 2 | 15 | -15 |
| Inventory | 68 → 95 | 27 | 10 | 3 | 14 | -14 |
| Trade payables | 41 → 60 | 19 | 5 | 1 | 13 | +13 |
The operating increases are 79 − 54 − 8 − 2 = 15 for receivables, 95 − 68 − 10 − 3 = 14 for inventory, and 60 − 41 − 5 − 1 = 13 for payables. Their combined operating-cash effect is −15 − 14 + 13 = -16. If the operating-cash subtotal before these three changes is 38 and already incorporates all other operating adjustments, the resulting subtotal is 38 − 16 = 22.
3. Correct the claim that 33 of cash was consumed
The faulty approach uses raw balance changes: −25 − 27 + 19 = -33, then inserts that amount into operating cash flow. The supported effect under this example’s assumptions is −16. The difference of 17 comes from the stipulated acquisition and translation effects. A mismatch at a real company does not, by itself, establish acquisitions or currency as its cause.
The IAS 7 overview describes indirect-method adjustments for non-cash effects and the investing classification of business-acquisition cash flows. That framework is why a balance-sheet increase should not automatically be treated as a current operating cash payment.
4. Find the reconciliation and supporting notes
- Find “Changes in operating assets and liabilities” in operating cash flow. Read exclusions for acquisitions and the sign convention along with the figures.
- Read the business-combination note for acquired receivables, inventory and payables. Separate those balances from the cash paid to acquire the business; do not count the acquisition payment again as operating working capital.
- Check allowance changes, write-offs or receivable sales, and inventory write-downs or reclassifications. Retain any unexplained amount as an unreconciled difference.
The actual Bentley Systems half-year 2025 filing provides a place to practise locating an acquisition-exclusion heading above operating asset and liability changes. It does not supply the fictional amounts in the table.
5. Leave item-specific checks for the next filing
| Current observation | Evidence to check next | Conclusion not established |
|---|---|---|
| Operating receivables increase of 15 | Collection terms, ageing, allowances and subsequent collection discussion | That the increase proves overdue or uncollectible accounts |
| Operating inventory increase of 14 | Raw materials, work in progress, finished goods, write-downs and sales discussion | That the increase proves obsolete inventory |
| Operating payables increase of 13 | Purchasing and payment terms, supplier finance and due-date disclosures | That cash preservation proves better operations |
Also compare same-period sales and cost of sales, seasonality and acquisition scope. The cash-conversion-cycle calculator can examine day measures after average balances and period flows have been aligned. It does not replace this reconciliation or determine collectability.
6. Write what was verified and what remains open
Example note: “Matched the scope of receivables, inventory and payables. After the assumed acquisition and translation adjustments, their combined operating-cash effect is −16, leaving a subtotal of 22. Collection and inventory-sale questions remain for the next relevant notes.” Attach account names, balance dates, units, filing link and page, adjustment evidence, and any unreconciled amount.
Use Samsung Electronics’ cash-flow page to reach the original filing and locate the notes. Details absent from the collected table require source review. Read the balance-sheet guide alongside it; this worksheet alone does not establish liquidity safety or an investment decision.
Official sources checked: . Actual filings linked here illustrate presentation and structure; they are not the source of the fictional figures.