Underlying Cash Balance - Department of Finance and Deregulation

Department of Finance and Deregulation Page 1 of 1 = Underlying Cash Balance The Underlying Cash Balance is a cash indicator of the financial impact of the Australian Government’s operations on the rest of the economy and is calculated as net cash receipts from operations (excluding Future Fund earnings), plus financing adjustments (to remove financing cash flows), plus net cash capital investment (net cash investment in non-financial assets). Diagram 1: Calculation of the Underlying Cash Balance Notes to Diagram 1: The accounting operating result is adjusted as follows as part of underlying cash derivation: (a) – adjust operating revenue used in fiscal balance calculation for non-cash elements not adjusted through working capital adjustments below (b) – adjust operating expenses used

in fiscal balance calculation for non-cash elements not adjusted through working capital adjustments below (c) – increase in working capital (operating) assets is a use of cash, for example prepayments and receivables (d) – increase in working capital (operating) liabilities means less cash is used, for example goods purchased on credit # - Financing adjustments – certain cash flows are regarded as financing transactions and therefore their impacts are removed from net cash from operating activities when calculating underlying cash balance figures. Currently these adjustments mainly relate to certain public debt cash flows. * - Capital adjustments are included in the calculation of the underlying cash balance as it involves a net call on financial markets and implementation of Government policy. Underlying cash balance incorporates net cash capital expenditure including any prepayments. Capital expenditure is defined as purchases less sales of fixed assets such as equipment and intangible assets such as spectrum. Underlying Cash Balance Capital adjustments* to reflect accrual net capital investment for the period (rather than accounting for the use of capital through depreciation). Investments are recognised in the period it occurs, being: Plus cash sales of Property, Plant & Equipment (PPE) + intangibles Less cash purchases of PPE + intangibles Less assets acquired under finance leases Accounting operating result as presented under Australian Accounting Standards, being: Plus accounting operating result (a) Less non-cash revenue (a) Plus non-cash expenses (b) Less increase in operating assets (c) Plus increase in operating liabilities (d) Less Future Fund income Financing adjustments# to remove cash flows more appropriately viewed as financing in GFS, including: Plus net interest on swap transactions (AOFM only) Plus other cash Public Debt Interest (PDI) adjustments (AOFM only) Plus net International Development Association/Asian Development Fund discount payments (AusAID only) + +...

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