help with cash flow stm

[a7m002]

For Cash flow statment direct method do you basically make changes for evertthing in income stmt and offset with just working capital?

And for Indirect, do we subtract interest expense/tax expse or since we are starting from net income, do we not worry about it and just adjust for changes in working capital? These always confuse me and i need to get them right for the test

 

[neerajkanchan]

Direct Method starts with CF in and then do add/subtract.
Indirect method starts with Net Income and considers Depreciation/Amortization.

 

[pepp]

Direct method starts with sales, and then does add/subtract only items that affect cash (including accrual adjustments)

Indirect starts with NI
Add NonCash additions to liabilities or reduction in assets;
Subtract Noncash additions to assets or reduction in liabilities;
Adjust for accrual adjustments