Indirect Method - Operating CF

Definition: The Indirect Method reconciles accrual-basis Net Income to cash-basis Operating Cash Flow by adding back non-cash charges (depreciation, amortizati…

Equation

Operating CF = Net Income + Non-Cash Expenses ± Changes in Working Capital

The Indirect Method reconciles accrual-basis Net Income to cash-basis Operating Cash Flow by adding back non-cash charges (depreciation, amortization, losses) and adjusting for changes in current assets and current liabilities.

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