Calculating Cash Flows From Operating Activities - Direct Method
Direct Method
Cash Receipts from Sales =
Sales + Decrease in Accounts Receivable
or
Sales - Increase in Accounts Receivable
Cash Payments for Purchases =
Cost of Goods Sold + Increase in Inventory + Decrease in Accounts Payable
or
Cost of Goods Sold + Increase in Inventory - Increase in Accounts Payable
or
Cost of Goods Sold - Decrease in Inventory - Increase in Accounts Payable
or
Cost of Goods Sold - Decrease in Inventory + Decrease in Accounts Payable
Cash Payments for Operating Expenses =
Operating Expenses + Increase In Prepaid Expenses + Decrease in Accrued Liabilities - Depreciation and Other Non-cash Expenses
or
Operating Expenses + Increase in Prepaid Expenses - Increase in Accrued Liabilities - Depreciation and Other Non-cash Expenses
or
Operating Expenses - Decrease in Prepaid Expenses + Decrease in Accrued Liabilities - Depreciation and Other Non-cash Expenses
or
Operating Expenses - Decrease in Prepaid Expenses - Increase in Accrued Liabilities - Depreciation and Other Non-cash Expenses
Cash Payments for Income Taxes =
Income Taxes + Decrease in Income Taxes Payable
or
Income Taxes - Increase in Income Taxes Payable