Cash-flow bridge classroom activity: sort payment cards and reconcile cash

Prepare a reconciliation for 45 minutes

Allow five minutes for opening cash, ten for sorting, ten for the bridge, ten for finding a missing card and ten for the conclusion. Hand out one card for each table row and three headings under which to place them. One student adds each group and another checks positive and negative signs.

Opening cash is SEK 40 million. Every table flow is paid in cash during the same fictional full year, with plus for receipts and minus for payments. There are no currency effects, interest or other payments beyond the cards. Operating cash flow of 90 is already a net amount: do not add sales receipts a second time.

If the table does not fit, scroll it sideways.

Student worksheet: build the bridge and check the bank

Place the cards under their headings and calculate each group’s net amount. Then build a bridge from opening to closing cash. A separate bank card says the year ends with 45. If the calculation does not reach that figure, identify the missing or incorrectly signed card rather than changing the bank card.

Next calculate free cash flow using our specific definition: operating cash flow minus cash machinery purchases, which are gross machinery investment. We do not subtract the business acquisition in this definition. Mark the cards included in the metric and those that need explaining when reconciling it to the change in cash. Keep the definition attached to the result.

Answers: the metric is 30 but cash increases by 5

Investing cash flow is −60 + 10 − 35 = −85, while financing cash flow is 20 − 15 − 5 = 0. Total cash change is 90 − 85 + 0 = +5. Opening cash of 40 plus 5 gives closing cash 45, matching the bank card.

Free cash flow is 90 − 60 = 30 under our definition. Its bridge is 30 + 10 − 35 + 20 − 15 − 5 = +5. The amount 30 is neither closing cash nor a promise of money freely available for distribution. The acquisition and other payments still require funding. Real reports can define free cash flow differently.

Teacher notes: hide the dividend and change one amount

Hide the dividend card but retain bank cash 45. Without the dividend, the calculation reaches 50; difference 5 shows the missing amount. Students cannot identify the payment solely from that difference. Ask them to request supporting evidence before revealing the card. A matching number alone is not a complete explanation of a transaction.

Restore every card and then change the business-acquisition payment from 35 to 50. This changes cash movement but leaves our defined free cash flow unchanged. Assess whether the group can explain both outcomes and provide a clear reconciliation. The activity uses chosen flow groups; real reporting classification needs checking. Investiq company search does not provide automatic bank or cash-flow reconciliation.