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Statement of cash flows




               2.2  Cash flows from operations – indirect and direct methods compared

               The indirect method of presenting cash flows from operations is based upon
               information already available within the annual financial statements.


               The direct method of presenting cash flows from operations is based upon cash
               flow information extracted directly from the accounting records to classify cash flows
               from operations.

               Indirect method                        $     Direct method                           $

               Profit before tax                     X      Cash receipts from customers            X

               Depreciation charge                   X      Cash payments to suppliers             (X)
               Profit on disposal of PPE             (X)    Cash payments to employees             (X)

               Increase in inventories               (X)    Cash payments for expenses             (X)

               Decrease in receivables               X
               Increase in payables                  X

                                                   ––––                                           ––––

               Cash generated from                   X      Cash generated from operations          X
               operations

               Interest paid                         (X)    Interest paid                          (X)
               Income tax paid                       (X)    Income tax paid                        (X)

                                                   ––––                                           ––––

               Net cash flow from                   X(X)    Net cash flow from operations          X(X)
               operations

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