vamseeachanta Standard Format (Indirect Method) (+1)
Standard Format (Indirect Method)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)
Adjustments to reconcile net income to net cash from operations:
Depreciation and amortization
Stock-based compensation
Amortization of debt issuance costs
Deferred income taxes
Loss (gain) on disposal of assets
Impairment charges
Other non-cash items
Changes in operating assets and liabilities:
Accounts receivable
Inventory
Prepaid expenses and other assets
Accounts payable
Accrued liabilities
Deferred revenue
Other liabilities
Net Cash Provided by (Used in) Operating Activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment
Purchases of investments
Proceeds from sale/maturity of investments
Acquisitions, net of cash acquired
Other investing activities
Net Cash Provided by (Used in) Investing Activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of debt
Repayment of debt
Proceeds from issuance of common stock
Repurchases of common stock
Dividends paid
Payment of debt issuance costs
Other financing activities
Net Cash Provided by (Used in) Financing Activities
Effect of exchange rate changes on cash
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
GAAP Presentation Requirements (ASC 230 / IAS 7)
- Indirect method is most common (start with net income, adjust for non-cash items)
- Direct method is permitted but rarely used (requires supplemental indirect reconciliation)
- Interest paid and income taxes paid must be disclosed (either on the face or in notes)
- Non-cash investing and financing activities disclosed separately (e.g., assets acquired under leases, stock issued for acquisitions)
- Cash equivalents: short-term, highly liquid investments with original maturities of 3 months or less