Module VI· Cash Flow Statement MechanicsIntermediate
Question

How do you split-test PP&E movement into capex and depreciation on the CFS?

Answer

Use the PP&E roll-forward: ending PP&E = beginning PP&E + capex - depreciation - disposals +/- FX / other. Solve for capex or check it against the cash flow statement. Depreciation is non-cash and added back in CFO; capex is a cash outflow in investing cash flow.