Tuesday, July 8, 2014

Today we heard that the SEC is sending, or at least planning to send, letters to companies complaining about missing calculation relationships in their XBRL filings. Of course this is good news…these relationships provide very valuable information for data users to understand what is going on with the numbers. 

But many people may not know what a calculation relationship is, and why it’s so important. So here is a visual representation from Calcbench’s website. These are the calculation relationships for a cash flow statement from a recent 10-K.

image

As you can see, it simply shows how all of the elements add up. The total change in cash for the period is calculated by adding up four elements, which in turn are calculated by adding and subtracting various elements of their own.

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