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Group statement of cash flows

1.4 Cash flows from operating activities

One of the key figures in cash flows from operating activities is 'cash generated from
operations'.

Cash generated from operations includes all day-to-day operating cash flows, such
as cash sales, cash purchases, wage payments, receipts from credit customers and
payments to credit suppliers.

There are two methods of presenting ‘cash generated from operations’:

 the direct method

 the indirect method.

Example 1

The direct method:

$m

Cash receipts from customers X

Cash paid to suppliers (X)

Cash paid to employees (X)

Other cash expenses (X)

–––––

Cash generated from operations X

–––––

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