Direct method

In relation to a Cash flow statement, the Direct method shows all the main categories of gross cash receipts and payments explicitly.

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Contrasted with the Indirect method, which starts with a reported profit/(loss) figure and then adjusts it to calculate the net cash movement for a period.

The indirect method is more widely used in external financial reporting.

Even though financial reporting standards encourage the use of the direct method.

See also

• Cash flow statement
• Financial reporting
• Gross
• Indirect method