Net Cash From Disc Ops
NetCashProvidedByUsedInDiscontinuedOperationsCashProvidedByUsedInOperatingActivitiesDiscontinuedOperationsCashProvidedByUsedInInvestingActivitiesDiscontinuedOperationsCashProvidedByUsedInFinancingActivitiesDiscontinuedOperationsNet cash from discontinued operations is the cash generated or used during a period by a business the company has sold, spun off, or classified as held for sale, when that business qualifies as a discontinued operation. It separates the cash flows of the exiting business from those of the operations the company is keeping.
It can be reported as one total or split into operating, investing, and financing pieces. Either way, it helps readers judge the cash-generating ability of the business that will remain.
A disposal qualifies as a discontinued operation under ASC 205-20 when it represents a strategic shift with a major effect on the company's operations and financial results, such as selling a major line of business or geographic area. ASC 230 does not require companies to show discontinued-operation cash flows separately, so practice varies. Some companies present them on their own lines within each section, tagged in XBRL as CashProvidedByUsedInOperatingActivitiesDiscontinuedOperations and the matching investing and financing elements; others show a single total, NetCashProvidedByUsedInDiscontinuedOperations. Many include them within the regular sections and disclose the amounts in the notes, which ASC 205-20 requires in some form.
One point often causes confusion. The cash received from selling the discontinued business is usually an investing inflow of the continuing company, reported as proceeds from divestitures, not as a cash flow of the discontinued operation itself. The discontinued line generally covers the business's own operating and investing cash flows up to the date of sale.
For analysis, the main use is to strip the exiting business out of historical figures. If a company's operating cash flow includes a profitable division it is selling, the continuing-operations figure is the better base for forecasting. Watch for companies that label ongoing losses as discontinued to flatter continuing results, and check that the separation is applied consistently across all periods presented.
A: Often yes. The standard totals for each section include discontinued operations unless the company presents continuing-operations subtotals. Check the face of the statement and the notes.
A: Usually not. The proceeds from selling the business are typically an investing inflow of the continuing company, reported as a divestiture.
A: It lets you separate the cash flow of the business being kept from the one being exited, which gives a cleaner base for forecasting future cash generation.
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