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Article: Fast track to direct cash flow reporting: It's easier than you think to provide the information financial statement users want. (Financial Management).(business accounting method)(Statistical Data Included)
- Article from:
- Strategic Finance
- Article date:
- February 1, 2002
- Author:
CopyrightCOPYRIGHT 2002 Institute of Management Accountants. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Even though good reasons abound for using the direct method of reporting operating cash flow, almost all managers choose the indirect method. We, and others whose opinions we respect, consider the direct method to be far superior to the indirect because it generates information that's more useful to the capital markets for assessing the amounts, timing, and uncertainty of a company's future cash flows. Contrary to today's conventional wisdom, the direct method isn't hard to apply. In fact, with the system modifications described in this article, it will be easy to provide the information financial statement users want. After applying these techniques, your financial ...