Cashflows and Investment in associates.

[bloodline]

I have been thinking about this for a couple of minutes and i thought others might be interested in chiming in their thoughts.

So if you have company A with 40% stake in company B what portion of company B’s cashflow does company A record in its statement of cashflows? Would this be the dividends recived only and the proportion of income generated by company B is ignored? Also, how is this accounted for as a free cash flow? Can company A record a proportion of companty B’s cash flow in its free cash flow?

[S2000magician]

@bloodline

I have been thinking about this for a couple of minutes and i thought others might be interested in chiming in their thoughts.

So if you have company A with 40% stake in company B what portion of company B’s cashflow does company A record in its statement of cashflows? Would this be the dividends recived only and the proportion of income generated by company B is ignored? Also, how is this accounted for as a free cash flow? Can company A record a proportion of companty B’s cash flow in its free cash flow?

Cash flow is . . . well . . . _ cash _ flow.

If you get cash (e.g., dividends), you record it (as CFI).

If you don’t get cash (e.g., A’s proportional share of B’s cash flow), you don’t record it.

As for free cash flow . . . see above.