The direct method is one way for a company to prepare its cash flow statement for presentation to shareholders. Both U.S. generally accepted accounting principles (GAAP) and International ...

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.

Example of a Cash Flow Statement. The Bottom Line. ... As mentioned previously there are two ways to build a cash flow statement: the direct method and the indirect method.

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

Operating cash flow (OCF) is the first section of a cash flow statement, showing cash from operating activities. OCF is calculated using an indirect or direct method.

CFO measures money flow from core business activities, excluding external funding. Three cash flow types: operating, investing, and financing, each reflecting different activities. To analyze CFO ...

Subtracting $75,000 from the $100,000 in sales revenue yields an OCF of $25,000 for the year using the direct method. ... have to use the indirect method on their annual cash flow statements.

Direct Method: This method draws data from the income statement using cash receipts and cash disbursements from operating activities. The net of the two values is the OCF.

Cash on hand and AR are counted among the assets, while AP is one of the liabilities. Other assets include real estate, vehicles and equipment that are already paid for and, therefore, do not have an ...