The IASB is developing proposals to improve disclosure of non-cash investing and financing transactions. A single tabular note would show these transactions alongside the equivalent cash flows reported in the cash flow statement.
We support the proposals. Non-cash transactions are, in effect, pairs of offsetting cash flows, and omitting them can materially distort free cash flow. The proposed disclosure would give investors the data needed to make adjustments we have long advocated, although the need for careful analysis, and potentially further adjustment, remains.
Continue reading “Non-cash transactions: Filling a free cash flow gap”