Direct Method of Presenting Cash Flows from Operations - 275 Words

Does HD Chocolate use the Direct or Indirect Method of Presenting Cash Flows from Operations? (Coursework Sample) Content: Finance HomeworkNameInstitutionDoes HD Chocolate use the direct or indirect method of presenting cash flows from operations?ÂJust like many corporations and companies do, HD chocolate uses the indirect method of presenting cash flow statements from its operations.What is the purpose of the statement of cash flows?The prime purpose of preparing a cash flow statement for business entities is to verify the sources of cash for the business and uses of the cash over a certain period of time à ¢Ã¢â€š ¬ mostly monthly or yearly. Traditionally, the statement of financial performance and that of financial position were considered more important than the cash flow. However, the cash flow supplements information that cannot be understood using the two methods.Despite the fact that cash flows are considered to be the least essential of financial statements, most investors and financiers tend to rely on information from it. The reason being, it is the most transparent. Hence, decision making is based on the cash flow statement. The cash flow consists of information from operating activities, investing activities and financing activities of the business entity.From this statement of cash flows, how does it appear the purchase of equipment was financed?The cash flow statement under indirect method has a section for cash flow from financing activities. These finances are the one used to purchase equipment among other things. The activities involve borrowing and repaying of loans, dividends payments as well...