Indirect method

Cash flow statements.

In relation to a Cash flow statement, the indirect method means starting with a reported profit/(loss) figure, and then adjusting it to calculate the net cash movement for a period.

Contrasted with the conceptually simpler Direct method of presentation, which shows all the main categories of gross cash receipts and payments explicitly.

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

See also

• Cash flow statement
• Direct method
• Financial reporting
• IAS 7
• Reconciliation