Cash flow statement
Indirect method, closing on balance-sheet cash.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: cash flow statement.Updated 30 September 2026
What it does
The indirect method: start from net income, add back non-cash charges, subtract the increase in working capital, and you have operating cash flow. Investing takes capex; financing takes debt movements and dividends. The closing cash is the balance-sheet cash. In an LBO the same logic is compressed into cash flow available for debt service.
Where it lives
The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.
- Cash Flow, rows 6–9: Net income, Depreciation, Increase in net working capital, Cash from operations
- Cash Flow, rows 23–25: Net change in cash, Opening cash, Closing cash
- Forecast, row 15: Add back depreciation and amortisation
- Forecast, rows 19–20: Unlevered free cash flow, Cash conversion, UFCF / EBITDA
- Operating Model, rows 20–21: Add back depreciation and amortisation, Add back fee amortisation (non-cash)
- Operating Model, rows 25–26: Free cash flow before debt repayment, FCF / EBITDA
What a reviewer looks for
- Signs: a use of cash shown as a source.
- An item that moves on the balance sheet with no line here to carry it.
- Closing cash typed rather than derived.
Learn it, then build it
Understand · Primer
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