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Hyperion Financial Management

Automated Cash Flow
August, 2009 Presented by:
John Herbert Robert Half Management Resources john.herbert@rhmr.com

Automate as much as possible

Changes in Balance Sheet (DFB) Roll forward and movement activity Acquisitons / Divestiture of businesses Cumulative Translation Adjustment (CTA)

Allow Metadata (not Rules) to drive your Cash

Flow calculations

Create Validation accounts to prove cash flow

and allow for greater analysis

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The basic Design steps include:

Create Cash Flow members in your Accounts dimension Attach a Calculations and Analysis Custom dimension to
each Cash Flow account

Attach a Movements (roll-forward) Custom dimension to

each Balance Sheet account

Link each Balance Sheet account to the appropriate

Cash Flow account through User Defined Fields

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 Add Cash Flow members to the Account Dimension Set Account Type to Revenue or Expense
Allows automatic currency translation Allows Dynamic Flow calculation (Periodic, QTD, YTD)

Attach a Custom Dimension to each Cash Flow account

Allows capture and analysis of Cash Flow calculations

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 Attach a Custom Dimension to each Cash Flow account

CF_Calc holds the change in

account balances derived from the Balance Sheet adjustments (Amort, Def Tax) and movements between cash flow accounts (Gain/Loss on sale of Assets, etc) adjustments that cannot be automated

CF_Reclass holds all non-cash

CF_Adjust holds all manual

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 Attach a Custom Roll-forward dimension to each B/S Account

Captures Currency Translation detail Captures Balance Sheet movement activity

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 Attach a Custom Roll forward

dimension to each B/S Account

Activity can be as robust as you need

Limited only by data availability, user acceptance, materiality

Minimum requirements include

Opening Balance (dynamic calc) Movement (optional) CTA (calculated) Undistributed / All Other (calculated) [None] (Trial Balance Input)

Switch type for Flow

BegBalance and [None] should inherit account type (Asset or Liability) All other custom members should be flagged with Switch type for Flow

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Populate roll-forward Opening Balance for

Dynamic Calc

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 User Defined Fields are used to link Balance Sheet

Accounts to Cash Flow Accounts

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The Process Flow Calculations include:

CF_Calc
Loop through Balance Sheet accounts Calculate net change (DFB) Post results to Cash Flow accounts

CF_Reclass
Loop through all Balance Sheet Movements Determine Reclass values Post results to Cash Flow accounts Record manual input adjustments as necessary Strip out effect of CTA from individual BS Movements Post activity to Effect of exchange rate on Cash

CF_Adjust

Consol/Translate

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CF_Calc

Loop through all B/S accounts and look in UD Field If there is a cash flow account identified, calculate
change from prior years ending balance (DFB)

Write result to the appropriate cash flow account

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Capture and Record all Movement Activity

Net Income Non-cash transactions Capital Purchases Gain/Loss on Sale of Assets Business Acquisitions / Divestitures Cumulative Translation Adjustment Etc.

Most, if not all, of these adjustments can be captured

automatically

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Statement of Income Sales Revenue Gross Margin SG&A Amortization Expense Net Income 200,000 42,000 30,000 2,000 10,000 Net Income Add back: Depreciation Add back: Amortization Incr/Decr in Inventory Incr/Decr in Payables Incr/Decr in Long Term Debt Gain/Loss on Sale of Fixed Assets Net Cash from Operating Activity Validation - Property, Plant, Equip Validation - Accum Amortization Validation - Retained Earnings Validation - Out of Balance Net Cash - Validation Errors Capital Expenditures Proceeds from sale of PPE Net Cash from Investing Activity Payments on Long Term Debt Net Cash From Financing Activity Net Increase/Decrease in Cash Cash Opening Balance Cash Closing Balance Change in Cash

CF Calc

CF Reclass 10,000

CF Total 10,000 11,000 (13,000) (15,000) (7,000) 4,000 2,000 6,000

11,000 (13,000) (15,000) (17,000) 4,000 2,000 10,000 16,000 10,000

PPE Roll Forward PPE - Opening Balance PPE - Purchases PPE - Disposals PPE - Depreciation PPE - Ending Balance PPE - (Gain)/Loss on sale PPE - Proceeds from sale 10,000 2,000 (5,000) (1,000) 6,000 (1,500) 6,500

(10,000) (10,000)

(1,000) 11,000 10,000 (1,000)

(1,000) 11,000 10,000 (1,000)

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Statement of Income Sales Revenue Gross Margin SG&A Amortization Expense Net Income 200,000 42,000 30,000 2,000 10,000 Net Income Add back: Depreciation Add back: Amortization Incr/Decr in Inventory Incr/Decr in Payables Incr/Decr in Long Term Debt Gain/Loss on Sale of Fixed Assets Net Cash from Operating Activity Validation - Property, Plant, Equip Validation - Accum Amortization Validation - Retained Earnings Validation - Out of Balance Net Cash - Validation Errors Capital Expenditures Proceeds from sale of PPE Net Cash from Investing Activity Payments on Long Term Debt Net Cash From Financing Activity Net Increase/Decrease in Cash Cash Opening Balance Cash Closing Balance Change in Cash

CF Calc

CF Reclass 10,000 2,000

CF Total 10,000 2,000 11,000 (13,000) (15,000) (5,000) 4,000 4,000

11,000 (13,000) (15,000) (17,000) 4,000 2,000 10,000 16,000 12,000

PPE Roll Forward PPE - Opening Balance PPE - Purchases PPE - Disposals PPE - Depreciation PPE - Ending Balance PPE - (Gain)/Loss on sale PPE - Proceeds from sale 10,000 2,000 (5,000) (1,000) 6,000 (1,500) 6,500

(2,000) (10,000) (12,000)

(1,000) 11,000 10,000 (1,000)

(1,000) 11,000 10,000 (1,000)

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Statement of Income Sales Revenue Gross Margin SG&A Amortization Expense Net Income 200,000 42,000 30,000 2,000 10,000 Net Income Add back: Depreciation Add back: Amortization Incr/Decr in Inventory Incr/Decr in Payables Incr/Decr in Long Term Debt Gain/Loss on Sale of Fixed Assets Net Cash from Operating Activity Validation - Property, Plant, Equip Validation - Accum Amortization Validation - Retained Earnings Validation - Out of Balance Net Cash - Validation Errors Capital Expenditures Proceeds from sale of PPE Net Cash from Investing Activity Payments on Long Term Debt Net Cash From Financing Activity Net Increase/Decrease in Cash Cash Opening Balance Cash Closing Balance Change in Cash

CF Calc

CF Reclass 10,000 1,000 2,000

CF Total 10,000 1,000 2,000 11,000 (13,000) (15,000) (1,500) (5,500) (2,000) 6,500 4,500 (1,000) 11,000 10,000 (1,000)

11,000 (13,000) (15,000) (17,000) 4,000 2,000 10,000 16,000 (1,500) 11,500 (4,000) (2,000) (10,000) (16,000) (2,000) 6,500 4,500

PPE Roll Forward PPE - Opening Balance PPE - Purchases PPE - Disposals PPE - Depreciation PPE - Ending Balance PPE - (Gain)/Loss on sale PPE - Proceeds from sale 10,000 2,000 (5,000) (1,000) 6,000 (1,500) 6,500

(1,000) 11,000 10,000 (1,000)

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CF Calc Net Income Add back: Depreciation Add back: Amortization Incr/Decr in Inventory Incr/Decr in Payables Incr/Decr in Long Term Debt Gain/Loss on Sale of Fixed Assets Net Cash from Operating Activity Validation - Property, Plant, Equip Validation - Accum Amortization Validation - Retained Earnings Validation - Out of Balance Net Cash - Validation Errors Capital Expenditures Proceeds from sale of PPE Net Cash from Investing Activity Payments on Long Term Debt Net Cash From Financing Activity Net Increase/Decrease in Cash Cash Opening Balance Cash Closing Balance Change in Cash 11,000 (13,000) (15,000) (17,000) 4,000 2,000 10,000 16,000

CF Reclass 10,000 1,000 2,000

CF_Adjust

CF Total 10,000 1,000 2,000 11,000 (13,000) (1,500) 9,500 (2,000) 6,500 4,500 (15,000) (15,000) (1,000) 11,000 10,000 (1,000)

15,000 (1,500) 11,500 (4,000) (2,000) (10,000) (16,000) (2,000) 6,500 4,500 15,000

(15,000) (15,000) -

(1,000) 11,000 10,000 (1,000)

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During Translation, we need to strip out the effect

of Cumulative Translation Adjustment Translation Adjustment due to Rate:
Prior Period Balance @ Prior Period EOM Rate Minus Prior Period Balance @ Current Period EOM Rate

Translation Adjustment due to Movement:

Current Period Activity @ Current Period AVG Rate Minus Current Period Activity @ Current Period EOM Rate

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Automate as much as possible

Changes in Balance Sheet (DFB) Roll forward and movement activity Acquisitons / Divestiture of businesses Cumulative Translation Adjustment (CTA)

Allow Metadata (not Rules) to drive your Cash

Flow calculations

Create Validation accounts to prove cash flow

and allow for greater analysis

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