True-Ups Coming
With the year complete, firms need to “true up” actual cash paid to federal, state, and foreign governments from the amount estimated throughout the year. The. The actual cash taxes paid may also reflect refunds, prior-year adjustments including that related to foreign taxes, legal settlements and changes to codes.
For the past quarter (firms with a December 31 year), the current quarter estimates were due December 15 but covers the quarter ending November with the “true-up” due typically by Mar 15, unless extended. As our firms are global in scope, with tax a large cash usage, foreign taxation and other non-US cash costs, including pensions where rules are different, are important to our analytical adjustments.
In equity markets such as that of 2025, not much of the above takes precedence to investors, but over the course of cycles, it sure does.
Tariffs can affect multiple financial statement accounts, including Inventory and its outflow expense, capital expenditures, the cost basis of purchased assets subject to depreciation, and general operating expenses. Furthermore, the US seller is impacted by increased input costs for imported manufacturing components, which affects the Statement of Cash Flows. While our full analysis accounts for complex areas such as asset impairment, these are beyond the scope of this report.
FOR THE FULL REPORT, YOU MUST BE A CREDIT TRENDS RESEARCH CLIENT
