The Advantages of Preparing a Cash Flow Statement Using the Direct Method. The statement of cash flows is one of the financial statements investors rely on to gauge a company's financial strength.

The cash flows, in and out, resulting from financing and investing activities are listed in the same way whether the direct or indirect method of presentation is employed.

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.

The direct method uses gross cash receipts and gross cash payments to prepare cash flow statements. This includes money paid to suppliers, receipts from customers, interest and dividends received, ...

Direct vs. indirect methods of preparing a cash flow statement: The direct method focuses on going through individual transactions and compiling income and expenses.

Cash flow statements are used to monitor the incoming and outgoing cash and cash equivalents of a company. See a cash flow statement example.

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

Learn financial statement analysis techniques, including horizontal, vertical, and ratio analysis, to assess company ...

What is a cash flow statement? A cash flow statement — also called a statement of cash flows — is a financial document showing how money flows in and out of a business. Common financial activities, ...