How Do I Find Cash Flows From Operations?

Question

Statement of Cash Flows, Financial Accounting and Reporting

Answer 1

To find cash flows from operations, convert accrual basis income statement figures to cash basis:

1. Subtract an Increase in Accounts Receivable (e.g., Add a Decrease in Accounts Receivable)
2. Subtract an Increase in Inventory (e.g., Add a Decrease in Inventory)
3. Subtract an Increase in Prepaid Expenses (e.g., Add a Decrease in Prepaid Expenses)
4. Add an Increase in Accounts Payable (e.g., Subtract a Decrease in Accounts Payable)
5. Add an Increase in Accrued Expenses (e.g., Subtract a Decrease in Accrued Expenses)
6. Add Depreciation and Amortization Expenses for the Year