I've been following this Udemy course on finance and valuation basics (Link). I am particularly confused when it comes to the cash flow statement part, specifically on how to get Operating Cash Flow (Net Cash from Operating Activities) using line items on the Balance Sheet and Income Statement. Below is a snapshot of an example calculation from the course.
I understand that Net Income should be adjusted for noncash items to get operating cashflow. For example, I get why depreciation is added back to Net Income, because in the Income Statement it is explicitly stated and deducted from the revenue. But I do not understand why Accounts Payable, Accounts Receivable, and Increase in Inventory are included in this adjustment. I know they are noncash items, but they aren't explicitly stated in the Income Statement when you are calculating Net Income initially.
My guess is that these items are already included beforehand in the Revenue (which is not shown explicitly anywhere in the financial report), which is why we still need to subtract/add them back when calculating operating cash flow. Is this correct or did I miss something? Thanks.