Cash Flows from Financing Activities
Cash flow from financing activities: Long-term debt and common stock Computing dividends paid Beginning retained earnings + Net income – Dividend = Ending retained earnings
Cash Flows from Investing Activities
Cash flows from investing activities The second and third steps in preparing the cash flow statement are to determine the total cash flows from investing activities and from financing activities. The presentation of this information is identical, regardless of whether the direct or indirect method is used for operating cash flows.
Conversion from the Indirect to Direct Method
If a direct-format statement is not available, cash flows from operating activities reported under the indirect method can be converted to the direct method. Accuracy of conversion depends on adjustments using data available in published financial reports. Method to Convert Cash Flow from Indirect to Direct The three-step conversion process: