Power Pivot Cracks Direct Method Cash Flow Conundrum
Many accountants consider that cash flow statements are the most important indicator of a company’s performance, as they do not involve estimates or judgments of the preparers.
While indirect method cash flow statements can be prepared easily from P&L and opening and closing balance sheets, they do not tell us much about where the money is coming from or going to. Because of this, users of financial statements and the accounting standard setters alike have always preferred direct method rather than indirect method cash flow statements.