Cash flow statement formats for the indirect and direct methods, with a worked example of operating, investing and financing activities and a free Excel template.
Cash flow statement format (indirect method)
| Particulars | Amount | Amount |
|---|---|---|
| A. Cash flow from operating activities | ||
| Net profit before tax | 5,73,000.00 | |
| Add: Depreciation | 1,40,000.00 | |
| Add: Finance costs | 95,000.00 | |
| Less: Interest income | (15,000.00) | |
| Operating profit before working capital changes | 7,93,000.00 | |
| Increase in inventories | (80,000.00) | |
| Increase in trade receivables | (75,000.00) | |
| Increase in trade payables | 75,000.00 | |
| Cash generated from operations | 7,13,000.00 | |
| Less: Income tax paid | (1,50,000.00) | |
| Net cash from operating activities | 5,63,000.00 | |
| B. Cash flow from investing activities | ||
| Purchase of fixed assets | (90,000.00) | |
| Purchase of investments | (50,000.00) | |
| Interest received | 15,000.00 | |
| Net cash used in investing activities | (1,25,000.00) | |
| C. Cash flow from financing activities | ||
| Repayment of long-term borrowings | (1,50,000.00) | |
| Decrease in short-term borrowings | (50,000.00) | |
| Finance costs paid | (95,000.00) | |
| Dividend paid | (50,000.00) | |
| Net cash used in financing activities | (3,45,000.00) | |
| Net increase in cash (A + B + C) | 93,000.00 | |
| Opening cash and cash equivalents | 2,55,000.00 | |
| Closing cash and cash equivalents | 3,48,000.00 |
Example figures. In a real statement closing cash must agree with cash and cash equivalents in the balance sheet.
Direct method
The direct method lists actual cash receipts and payments for operating activities: cash received from customers, cash paid to suppliers and employees, other operating payments, and income tax paid. Investing and financing sections are the same as the indirect method.
| Operating activities (direct) | Amount |
|---|---|
| Cash received from customers | 47,75,000.00 |
| Cash paid to suppliers | (30,50,000.00) |
| Cash paid to employees | (8,20,000.00) |
| Other operating payments | (1,92,000.00) |
| Income tax paid | (1,50,000.00) |
| Net cash from operating activities | 5,63,000.00 |
Where items go
| Activity | Examples |
|---|---|
| Operating | Sales receipts, supplier and salary payments, tax paid |
| Investing | Buying or selling fixed assets and investments, interest and dividend received (for non-finance companies) |
| Financing | Issue of shares, loans taken or repaid, interest and dividends paid |
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Reading the example
The business made a profit, but its cash rose by less than the profit because money went into stock and debtors, new assets and loan repayment. That is the main use of a cash flow statement: it shows how profit turns into cash, or does not.
Downloadable Excel
Frequently asked questions
Why add back depreciation?
Depreciation reduces profit but does not use cash, so it is added back when starting from profit.
Which method is more common?
The indirect method, because it starts from the profit already in the accounts.
Checked and updated 14 Oct 2026. Independent template site; not tax or legal advice.