Video: Operating Cash Flow - Indirect Method

In this lesson, Nick Palazzolo, CPA, dives into the nuances of calculating operating cash flow using the indirect method. He starts by emphasizing the pivotal role of net income as the starting point and illustrates how to adjust it by factoring in deferrals, accruals, and non-cash transactions like depreciation. Nick meticulously demonstrates the process of converting from accrual to cash basis by backing out particular items to arrive at the net cash flow from operating activities. Furthermore, he delegates time to clarify the mandatory supplemental disclosure requirements for cash paid towards interest and income taxes, underscoring their significance in the context of financial reporting.