What Is Cash Flow From Operating Activities CFO? The Motley Fool
The company subtracts any increase in accounts receivable because that increase represents cash the company hasn’t received yet. The company adds any increase in accounts payable because that increase represents cash the company hasn’t spent yet. Under the indirect method, cash flow from operating activities is calculated by first taking the net income from a company’s income statement. Because a company’s income statement is prepared on an accrual basis, revenue is only recognized when it…