Formulas and a complete synthetic worked example
Reconstructed OCF = net income + signed noncash and other reconciliation adjustments + signed working-capital / other operating changes. OCF gap = reconstructed OCF − reported OCF. User-defined FCF = reconstructed OCF − cash PP&E purchases. Shareholder cash payments = cash dividends paid + cash share repurchases. Residual = user-defined FCF − shareholder cash payments.
The cash balance bridge uses beginning cash + reported OCF + signed net investing + signed net financing + signed currency / other cash reconciliation effect. Cash gap = calculated ending cash − reported ending cash. Do not substitute FCF for reported OCF in that equation; PP&E purchases are already in net investing.
| Calculation | Exact result | What the result means |
|---|---|---|
| 120 net income + 40 adjustments − 25 operating changes | 135 OCF | Matches entered reported OCF of 135; gap 0. |
| 135 OCF − 55 cash PP&E purchases | 80 user-defined FCF | A non-GAAP worksheet definition, not all available cash. |
| 30 cash dividends + 65 cash repurchases | 95 shareholder cash payments | Actual assumed annual payments; no authorization amounts. |
| 80 FCF − 95 payments | −15 residual | Payments exceed this definition by 15; no funding source is inferred. |
| 100 beginning + 135 operating − 45 investing − 85 financing − 2 FX | 103 ending cash | Matches entered ending cash of 103; gap 0. Cash increased by 3. |
The −45 investing total consists of −55 PP&E purchases and +10 asset-sale proceeds. The −85 financing total consists of −30 dividends, −65 repurchases and +10 net borrowing. This explains why a −15 residual can coexist with a +3 change in cash: the two calculations include different items.
Explore one change at a time.
- Keep the synthetic result as a baseline. Reduce repurchases from 65 to 20: shareholder cash falls by 45 and the residual rises to 30.
- The cash balance does not change automatically: financing is an independent reported total. In a consistent hypothetical statement, change net financing from −85 to −40; calculated ending cash becomes 148.
- If reported ending cash remains 103, the second reconciliation gap is +45. Update that endpoint only when constructing the complete hypothetical scenario, never to conceal a discrepancy in a real source.
A baseline stores the input labels, amounts and calculated values in memory. Comparison deltas are current minus baseline. Reset restores the synthetic inputs; a saved baseline remains until you clear it or reload the tab. Export includes the current inputs, results and any retained comparison.
Assumptions and limitations
Enter zero only when supported; a blank required input blocks the result. Reported OCF can be left blank, but its reconciliation and the cash balance check are then unavailable. All five cash balance fields may be omitted together. Negative OCF, FCF and residuals are preserved. There is no payout ratio or division by a zero or negative cash-flow total.
A matching total tests arithmetic only. Grouped entries can hide offsetting errors. A source reported in rounded millions can itself introduce a small gap; this tool shows it exactly and applies no automatic tolerance. Preserve the original source precision and explain any discrepancy.
FCF here deducts only the specified cash PP&E purchases. It does not deduct every acquisition, debt repayment, lease commitment or future reinvestment requirement. Stock compensation remains an economic issue even when added back in operating cash flow. Read the operating cash-flow guide and dividends and buybacks guide before interpreting the residual.
Accepted amounts have up to 30 integer and 16 fractional digits. An isolated Decimal arithmetic context uses 80 significant digits; these bounded additions and subtractions retain exact decimal strings. Arithmetic precision does not increase the accuracy of the source inputs. Only visual bar widths are rounded. CSV neutralizes spreadsheet-formula text while retaining numeric negative amounts.
Sources, scope and next steps
This material covers annual statements for US nonfinancial operating companies, using US GAAP presentation and one reporting currency. The workbench fixes the unit at USD million. Banks, insurers, REITs and BDCs require different analytical frameworks; cross-border accounting classifications also need separate review. Examples are synthetic unless an identified historical filing is loaded.
- SEC: Beginners’ Guide to Financial Statements — the cash-flow statement and its relationship to earnings.
- SEC staff: Non-GAAP Financial Measures, Question 102.07 — explain the FCF definition and its limitations; other obligations may remain after capital expenditures.
Source guidance checked October 18, 2026. DFB’s worksheet arithmetic and teaching examples are its own. Educational analysis, not an issuer rating, a forecast or individualized advice. Editorial policy · Report a source or calculation correction.