Module I· Cash Flow Statement ConstructionIntermediate
Question
What is the cash bridge — from opening to closing cash?
Answer
Mechanics
The cash bridge is the mathematical link of the cash movement across a period.
Formula
```
Opening cash + OCF + ICF + CFF + FX effect = closing cash
```
This bridge has to tie in every 3-statement model — otherwise the balance sheet doesn't balance. 'Restricted cash' (guarantees, escrows) is usually NOT included in this bridge, but is a separate balance-sheet line.
Deep diveShow more details
Example — Industrial Manufacturing Co (FY2024)
Inputs:
- Opening cash: $50m
- OCF: +$120m
- ICF: −$80m (capex −$60m, acquisition −$20m)
- CFF: −$30m (dividend −$20m, debt repayment −$10m)
- FX effect: $0
Calculation:
```
Closing cash = $50 + $120 − $80 − $30 + $0 = $60m
```
That $60m is the balance-sheet line 'cash and cash equivalents' at year-end.
Pitch tip
In pitches, use the cash bridge to show pro-forma liquidity — 'post-transaction closing cash falls from $60m to $20m, but the liquidity cushion stays adequate through $100m of undrawn revolver capacity'.