The indirect method of determining cash from operations is most often used as this method produces larger positive cash flows than the direct method.

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The indirect method of determining cash from operations can produce either a larger or smaller positive cash flow than the direct method, depending on the specific circumstances of the company. The indirect method starts with net income and makes adjustments to convert it to cash from operations, while the direct method directly calculates cash received from customers and cash paid to suppliers and employees. Some companies prefer the indirect method because it requires less detailed information, while others prefer the direct method because it provides more transparency and clarity about the sources and uses of cash.

The Indirect Method of Determining Cash from Operations Is Most