Module VI· Cash Flow Statement MechanicsAdvanced
Question
How do you treat M&A cash flows such as acquisitions and divestitures in the CFS?
Answer
Acquisition purchase price paid is usually an investing cash outflow, net of cash acquired depending on presentation. Divestiture proceeds are investing cash inflows. Gains or losses on sale are removed from CFO under the indirect method because the cash proceeds are in investing. Transaction fees may be operating, investing, or financing depending on nature.