Other Cash Adjustment Outside Change in Cash
Non-Cash or Reclassification Items Affecting Reported Cash Balance
Other Cash Adjustment Outside Change in Cash captures items that impact the reported cash and cash equivalents balance on the balance sheet but are not reflected in the 'Change in Cash' line derived from the cash flow statement. These adjustments typically arise from non-operating events, reclassifications, or foreign exchange effects that directly alter the cash balance without flowing through the standard operating, investing, or financing activities.
Why This Adjustment Exists
The cash flow statement shows how operations, investing, and financing change cash. But the actual ending cash balance can differ due to items outside those three categories.
This line bridges the gap: Change in Cash (from CFS) + Other Adjustments = Actual change in reported cash balance.
It's the 'plug' that makes the cash reconciliation work.
Common Items Included
- Effect of exchange rate changes on foreign cash balances
- Reclassification of restricted cash to/from other assets
- Cash acquired in business combinations (not shown in investing)
- Cash transferred in divestitures
- Initial consolidation/deconsolidation of entities
- Bank overdrafts reclassified to liabilities
FX impact on cash is the most frequent—strong dollar reduces reported foreign cash value without any transaction.
A Simple Example
Company starts year with $100M cash, including €20M in Europe.
- Cash flow statement shows +$10M net change
- Expected ending cash: $110M
- But euro weakens → €20M now worth only $18M equivalent
- Actual ending cash: $108M
Other Cash Adjustment Outside Change in Cash: -$2M (FX effect). $100M + $10M CFS + (-$2M adjustment) = $108M actual.
Where It Appears
In the cash reconciliation footnote:
- Beginning cash
- +/- Net cash flow from activities
- +/- Effect of exchange rate changes
- +/- Other adjustments outside change in cash
- = Ending cash
Required disclosure under ASU 2016-18 (US GAAP) and IAS 7.
What It Signals
- FX exposure on cash holdings
- M&A activity (cash acquired/divested)
- Changes in restricted cash status
- Structural changes (consolidation shifts)
- Non-operating cash movements
Large recurring FX adjustments highlight foreign cash concentration.
Analytical Implications
- True operational cash generation (add back non-operating adjustments)
- Currency risk in cash portfolio
- Impact of corporate actions (M&A, divestitures)
- Restricted cash dynamics
- Reconciliation integrity check
Persistent negative adjustments may mask weaker operating cash flow.
Key Takeaways
Reconciles cash flow statement change to actual balance sheet change.
Captures FX effects, M&A cash, restricted cash moves.
Outside the three main cash flow categories.
Highlights non-operating influences on cash.
Essential for understanding true liquidity sources.
Check footnote for composition—often dominated by FX.
Other Cash Adjustment Outside Change in Cash
Non-Cash or Reclassification Items Affecting Reported Cash Balance
Other Cash Adjustment Outside Change in Cash captures items that impact the reported cash and cash equivalents balance on the balance sheet but are not reflected in the 'Change in Cash' line derived from the cash flow statement. These adjustments typically arise from non-operating events, reclassifications, or foreign exchange effects that directly alter the cash balance without flowing through the standard operating, investing, or financing activities.
Table of Contents
Why This Adjustment Exists
The cash flow statement shows how operations, investing, and financing change cash. But the actual ending cash balance can differ due to items outside those three categories.
This line bridges the gap: Change in Cash (from CFS) + Other Adjustments = Actual change in reported cash balance.
It's the 'plug' that makes the cash reconciliation work.
Common Items Included
- Effect of exchange rate changes on foreign cash balances
- Reclassification of restricted cash to/from other assets
- Cash acquired in business combinations (not shown in investing)
- Cash transferred in divestitures
- Initial consolidation/deconsolidation of entities
- Bank overdrafts reclassified to liabilities
FX impact on cash is the most frequent—strong dollar reduces reported foreign cash value without any transaction.
A Simple Example
Company starts year with $100M cash, including €20M in Europe.
- Cash flow statement shows +$10M net change
- Expected ending cash: $110M
- But euro weakens → €20M now worth only $18M equivalent
- Actual ending cash: $108M
Other Cash Adjustment Outside Change in Cash: -$2M (FX effect). $100M + $10M CFS + (-$2M adjustment) = $108M actual.
Where It Appears
In the cash reconciliation footnote:
- Beginning cash
- +/- Net cash flow from activities
- +/- Effect of exchange rate changes
- +/- Other adjustments outside change in cash
- = Ending cash
Required disclosure under ASU 2016-18 (US GAAP) and IAS 7.
What It Signals
- FX exposure on cash holdings
- M&A activity (cash acquired/divested)
- Changes in restricted cash status
- Structural changes (consolidation shifts)
- Non-operating cash movements
Large recurring FX adjustments highlight foreign cash concentration.
Analytical Implications
- True operational cash generation (add back non-operating adjustments)
- Currency risk in cash portfolio
- Impact of corporate actions (M&A, divestitures)
- Restricted cash dynamics
- Reconciliation integrity check
Persistent negative adjustments may mask weaker operating cash flow.
Key Takeaways
Reconciles cash flow statement change to actual balance sheet change.
Captures FX effects, M&A cash, restricted cash moves.
Outside the three main cash flow categories.
Highlights non-operating influences on cash.
Essential for understanding true liquidity sources.
Check footnote for composition—often dominated by FX.
Related Terms
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