It's very common when looking at two balance sheets to look at a line item and find that it actually impacts two different parts of a cash flow statement To separate these two items, we're going to use BASE analysis B A S E (beginning, add, subtract, ending) A good example of this is net PP&E (Property, plant and equipment) If I were to take my beginning net PP&E, I would ask myself "What might make that go up"? "What would I add onto it"? I would add onto to that capex or capital expenditure And that's an investing cash flow and it goes in the investing activities part of the cash flow statements The next item I would ask is "What would I subtract from beginning net PP&E to make net PP&E go down"? And that's depreciation and depreciation goes into the operating part of the cash flow statement It I take my beginning net PP&E, add capex, minus depreciation, I get my ending net PP&E So I can use two balance sheets, net PP&E from year 0 maybe (that would be my beginning figure) And I could use my net PP&E from year 1 (that would be my ending net PP&E) And I could use my depreciation figure, I could then maybe back solve to find capex Another item where BASE analysis is also useful is net intangibles The add and subtract lines here are purchasing of intangibles which are investing items and amortization (that's my subtract line) is an operating cash flow item One last one, retained earnings. I take my beginning retained earnings, I add on net income income That's an operating cash flow item And I subtract dividends, that is a financing cash flow item So really useful to look at BASE analysis, maybe I've got retained earnings at the beginning of the year And retained earnings at the end of the year I don't want to just treat the change in them as one line item in the cash flow statement. I want to split them into two In this case, net income in operating and dividends into financing