8. • This section includes cash flows from the principal revenue
generation activities such as sale and purchase of goods and services.
• Cash flows from operating activities can be computed using two methods.
• One is the Direct Method and the other Indirect Method.
Eg. Payments to Suppliers, Employees.
2. Cash received from customers through sale of goods or serivces
performed.
9. • Cash flows from investing activities are cash in-flows and out-flows
related to activities that are intended to generate income and cash
flows in future.
• This includes cash in-flows and out-flows from sale and purchase of
long-term assets.
E.g Cash payments to acquire property, plant.
2. Cash paid for investing in Shares, Debenture,etc.
3. Cash received for Sale of Goods.
10. • Financing Activities include cash activities related to noncurrent
liabilities and owners’ equity.
• Noncurrent liabilities and owners’ equity items include :
(1) the principal amount of long-term debt,
(2)stock sales and repurchases
(3) dividend payments. (Note that interest paid on long-term debt is
included in operating activities.)
E.g Cash received for issue of Shares.
2. Cash paid for repayment of loans.
