How to compute cash flow from operating activities?
Understand the Problem
The question is asking for the method or steps involved in calculating cash flow from operating activities, which is a key component of the cash flow statement. This involves understanding the adjustments made to net income to reflect actual cash generated from core business operations.
Answer
Net Income + Non-Cash Items + Changes in Working Capital
The final answer is: Cash Flow from Operations = Net Income + Non-Cash Items + Changes in Working Capital
Answer for screen readers
The final answer is: Cash Flow from Operations = Net Income + Non-Cash Items + Changes in Working Capital
More Information
Calculating cash flow from operating activities helps in assessing the financial health of a company's core business activities.
Tips
Ensure all non-cash items are correctly added back and working capital changes are accurately accounted for.
Sources
- Cash Flow from Operations - Definition, Formula and Example - corporatefinanceinstitute.com
- What Is Operating Cash Flow (OCF)? - Investopedia - investopedia.com
- Operating Cash Flow Formula - Wave Accounting - waveapps.com
