The Advantages of Preparing a Cash Flow Statement Using the Direct Method. The statement of cash flows is one of the financial statements investors rely on to gauge a company's financial strength.

The direct method of preparing a cash flow statement differs from the indirect method only in the operations section. The investments and financing sections are identical.

Explore the fundamentals of cash flow statements, including their structure, significance, and the insights they provide into a company's financial health in 2025.

Understanding cash flow statements is important because they measure whether a company generates enough cash to meet its operating expenses.

Regardless of whether the direct or the indirect method is used, the operating section of the cash flow statement ends with net cash provided (used) by operating activities.

Cash flow from operating activities is exactly what you might imagine: it's how much cash is moving between the company and the customer. Learn more here.

Figuring Operating Cash Flow There are two ways to calculate operating cash flow. The direct method is simple and gives a basic indicator of OCF.

A cash flow statement is a financial statement that provides aggregate data regarding all cash inflows and outflows that a company has.

A cash flow statement — also called a statement of cash flows — is a financial document showing how money flows in and out of a business. Common financial activities, such as applying for a business ...