Cash flow statement example, format and template: the indirect method on one company

This is a full statement of cash flows for one company, prepared by the indirect method under US GAAP, followed by a free Excel template that builds the same statement from your own balance sheets and income statement. It is a company statement for business reporting, not a personal budget.

The format: three sections and a reconciliation

A statement of cash flows under US GAAP (ASC 230) has three sections and a reconciliation at the foot:

1. Cash flows from operating activities. Under the indirect method this starts at net income, adds back non-cash items, and adjusts for changes in operating assets and liabilities.
2. Cash flows from investing activities. Buying and selling property, equipment and investments.
3. Cash flows from financing activities. Borrowing and repaying debt, issuing or buying back stock, and paying dividends.
4. Net increase (decrease) in cash, then cash at the beginning of the year and cash at the end of the year.

The SEC's beginners' guide to financial statements describes the operating section the same way: it reconciles net income to the cash the company actually received from or used in its operations, adding back non-cash items such as depreciation. The captions below are the ones a US 10-K uses. IAS 7 has the same three sections, and IFRS 18, effective January 1, 2027, narrows the classification choices IFRS reporters have had.

Cash flow statement example (indirect method)

Fiscal year ended December 31, 2026, in USD. Amounts in parentheses are cash out.

The equipment was sold at its book value of 20,000, so there is no gain to remove. Free cash flow, operating cash flow less capital expenditure, is 480,000 − 260,000 = 220,000. It is not a US GAAP measure, so label it if you report it.

Where each line comes from

The sign rule decides every working capital line: an operating asset that goes up used cash; an operating liability that goes up kept cash in the business. Receivables rose 80,000 because sales were booked that customers had not yet paid for, which is the gap between revenue and cash described in bookings, billings and revenue. How long that cash stays out is what days sales outstanding measures.

Classification follows ASC 230: interest paid and income taxes paid are operating cash outflows, while dividends paid and repayments of borrowing are financing outflows.

The same operating section by the direct method

The direct method lists the cash itself. For the same company, with revenue of 4,800,000, cost of goods sold of 2,880,000, other operating expenses of 1,190,000, interest of 20,000 and tax of 140,000, all paid in the year:

Same answer, as it must be. Most companies present the indirect method, because it comes straight from the balance sheet and income statement, and a company that presents the direct method under ASC 230 must still provide the reconciliation of net income to operating cash flow. The direct view is still worth having: it is the basis of a 13-week cash flow.

The check that proves it

Two tests, both in the template:

1. Ending cash ties. Opening cash 310,000 + net increase 80,000 = 390,000, which is the cash on the December 31 balance sheet. The CFS sheet shows the difference, and it must be 0.
2. Each line equals a balance sheet movement. Receivables, inventory, payables and the bank loan are each the end balance minus the start balance. Retained earnings move by net income less dividends (765,000 + 420,000 − 60,000 = 1,125,000), and property and equipment by capital expenditure less depreciation less the book value sold (1,200,000 + 260,000 − 150,000 − 20,000 = 1,290,000).

The closing-cash test is an identity in the sense of control totals and identities: it holds by construction when every line is right, so a nonzero difference proves something is wrong, even if every line looks plausible.

What is in the template

• BS. Two balance sheets side by side, with the movement in column D. A balance row must be 0 in both years.
• PL. The income statement, plus the notes the statement needs: capital expenditure, sale proceeds, the book value of equipment sold, dividends paid and stock issued. The gain on sale is computed as proceeds minus book value.
• CFS. The statement, with every line a formula. A working capital line is the negative of the asset movement:

=-BS!D6

Payables take the movement as it is (=BS!D10), and the closing check is:

=B24-B25

• Direct. The direct-method operating section, built from revenue, costs and the same balance sheet movements, compared with the indirect figure.
• Check. Eight differences that must all be 0, with "All checks pass" at the foot.

To fill it, export the two year-end balance sheets and the year's income statement from your accounting system, type them into the yellow cells, and add rows for anything your company has that the sample does not: accrued liabilities, prepaid expenses, stock-based compensation, leases. Pull each new line from its balance sheet movement in the same way, and extend the SUM ranges.

Where it goes wrong

• Working capital sign backwards. An increase in receivables reduces cash and shows in parentheses. Getting this wrong moves operating cash flow by twice the movement.
• A gain on disposal counted twice. The gain is in net income and the sale proceeds are in investing, so the operating section deducts the gain.
• Interest and dividends in the wrong section. Under US GAAP interest paid is operating and dividends paid are financing. Only IFRS reporters have had a choice, which IFRS 18 largely removes.
• Movement in total current liabilities. It drags short-term debt into operating cash flow. Take payables and accruals line by line, and leave borrowing in financing.
• A statement that does not tie. If ending cash differs from the balance sheet, the statement is wrong somewhere, however plausible each line looks. Customer-level changes in receivables, such as those behind credit limit headroom, will not fix a statement that does not tie.

From the statement to a cash forecast

This statement looks back. Looking forward a quarter, week by week, is the job of the 13-week cash flow template. A cash flow statement that does not tie to balance sheet cash is the most common error in a hand-built reporting package. Covirage's tools compute each line from your ledger exports and assert the tie before anything is published; the external AI model explains the movement and never does the arithmetic. See FP&A reporting for the statement, the P&L and the monthly package produced from your ledger and reconciled before anyone reads them. For the forward view, see cash flow forecast; for a startup's monthly cash use, burn rate.