Say XYZ Services uses the direct method to prepare its cash flow statement. In the operating section of the cash flow statement, XYZ shows $200,000 in cash receipts from customers, $117,000 in ...

The cash flow statement describes how cash enters and leaves a company for the period. The statement contains sections for operating, investing and financing activities. The direct method pertains ...

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.

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. This is the most ...

For example, there may be high accounts receivable which resulted in high income, but low cash flow. This bests the direct method, which only looks at the difference between cash inflows and outflows.

Either way, the operating cash flow should be the same between the direct and indirect method, because the goal is always to show money leaving or entering a business over a given period.

Depreciation is a non-cash accounting expense that doesn’t involve cash flow, but it is a factor that can impact all areas of a company’s financial performance.

The Direct Method. This method traces every transaction in a set timeframe on a cash basis. Examples of items included in the direct method of operating cash flow consist of… Salaries paid out to ...