Direct Method (Cash Flow)
Shows actual cash receipts and payments: cash from customers, cash to suppliers, etc. More intuitive than the indirect method which starts with profit and adjusts.
- How it's worked out
- Reports actual cash transactions vs. starting with Net Income and adjusting
- Which way is better
- Read it in contextNeither higher nor lower is better on its own. Read it alongside the measures around it.
Written by Mandy Walker, founder of Focus on Cash. Updated October 2026. This explanation comes from the glossary inside Focus on Cash, so it matches the words you see in the app.
Related measures
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