University · Calculators

Cash flow statement builder.

Build the AS 3 / Ind AS 7 indirect-method cash flow statement — operating, investing, financing — with the reconciliation to closing cash, an honest note on where AS 3 and Ind AS 7 actually differ on interest-paid classification, and the Schedule III small-company exemption.

All tools

A. Operating (₹ lakh)

Profit before tax (PBT)

Depreciation & amortisation

Non-cash — added back

Finance cost recognised in P&L

Added back here; the cash outflow is entered once below and routed by the classification toggle

Net unrealised forex loss / (gain)

Positive = loss, added back. Negative = gain, deducted.

Profit / (loss) on sale of PPE or investments

Positive = profit, deducted here (cash effect shown in investing). Negative = loss, added back.

Other non-cash adjustments (net)

Positive adds back, negative deducts. Leave 0 if none.

Working capital movements

Increase / (decrease) in trade receivables

Increase / (decrease) in inventories

Increase / (decrease) in trade payables

Taxes paid

Cash taxes paid during the year

B. Investing (₹ lakh)

Purchase of PPE / capex

Proceeds from sale of PPE

Purchase of investments

Proceeds from sale / maturity of investments

Interest & dividend received

C. Financing (₹ lakh)

Proceeds from borrowings drawn

Repayment of borrowings

Dividends paid

Interest paid (cash)

Actual cash interest paid — routed to operating or financing by the toggle below

Opening cash & cash equivalents

Classification & exemption

Interest paid — classify as

Is the entity any of these?

Interest-paid classification, verified

AS 3 and Ind AS 7 do not treat this the same way. AS 3 para 30 mandates the classification for an entity other than a financial enterprise — interest paid as a financing outflow, interest & dividends received as investing — there is no choice under AS 3. Ind AS 7 para 33 instead gives an entity other than a financial institution a genuine either/or: interest paid as operating (it enters into profit or loss) or financing (a cost of obtaining financial resources), applied consistently as an accounting policy. Financial enterprises/institutions classify interest paid, and interest & dividends received, as operating under both frameworks. The toggle above reflects the Ind AS 7 choice — an AS 3 preparer for a non-financial enterprise should leave it on financing.

Cash flow statement — indirect method

A. Operating activities

Profit before tax₹480

Depreciation & amortisation₹95

Finance cost₹60

Unrealised forex loss₹8

Profit on sale of assets/investments(₹12)

Operating profit before working capital changes₹631

Increase in trade receivables(₹70)

Increase in inventories(₹40)

Increase in trade payables₹35

Cash generated from operations₹556

Taxes paid(₹110)

Net cash from operating activities₹446

B. Investing activities

Purchase of PPE / capex(₹220)

Proceeds from sale of PPE₹30

Purchase of investments(₹50)

Proceeds from sale / maturity of investments₹20

Interest & dividend received₹14

Net cash from investing activities(₹206)

C. Financing activities

Proceeds from borrowings₹150

Repayment of borrowings(₹180)

Dividends paid(₹40)

Interest paid (financing)(₹58)

Net cash from financing activities(₹128)

Net increase / (decrease) in cash (A+B+C)₹112

Opening cash & cash equivalents₹85

Closing cash & cash equivalents₹197

Where this lives in the audit

The cash flow statement should be a derivation, not a plug figure.

CORAA derives the cash flow statement from the same mapped trial balance as the rest of the financials, working-capital deltas included — so the reconciliation to closing cash ties out by construction instead of being forced with a balancing entry.

Keep going

The Schedule III disclosure suite.

Try CORAA Studio More tools

Working the rest of the note? Pair this with the trade receivables ageing analyzer and the Schedule III ratio calculator.

How the indirect-method cash flow statement works

AS 3 (Cash Flow Statements, for companies not applying Ind AS) and Ind AS 7 (Statement of Cash Flows, for Ind AS companies) both require cash flows to be classified into operating, investing and financing activities, reconciled to the net movement in cash and cash equivalents for the period. Under the indirect method, the operating section starts from profit before tax and works back to a cash basis: non-cash items (depreciation, unrealised forex movements, provisions) are added back or deducted, non-operating items (finance cost, profit/loss on sale of assets) are removed so they can be shown in their proper section, and working-capital movements (receivables, inventory, payables) convert accrual profit to cash generated from operations.

Investing activities capture cash flows from the acquisition and disposal of long-term assets and investments not classified as cash equivalents — capital expenditure, proceeds from asset sales, purchases and maturities of investments, and (commonly) interest and dividends received. Financing activities capture cash flows that change the size and composition of the entity's equity and borrowings — proceeds and repayments of borrowings, dividends paid, and (per the classification chosen) interest paid.

Interest paid, and interest and dividends received, are not treated the same way by the two standards for an entity other than a financial enterprise. AS 3 (para 30) mandates the classification — interest paid as a financing cash flow, interest and dividends received as an investing cash flow — there is no choice under AS 3. Ind AS 7 (para 33) instead permits a genuine either/or for the same entity type: interest paid as operating or financing, interest/dividends received as operating or investing, as a matter of accounting policy applied consistently period to period. Financial enterprises and institutions (banks, NBFCs) classify all three as operating under both frameworks. This builder defaults interest paid to financing and investment income to investing — the treatment every AS 3 preparer must use, and the one most Ind AS preparers also choose — but the toggle changes only the classification, not the total net change in cash.

Worked example — reconciling PBT to closing cash

A company has PBT of ₹480 lakh, depreciation of ₹95 lakh, finance cost of ₹60 lakh, a receivables increase of ₹70 lakh, an inventory increase of ₹40 lakh, a payables increase of ₹35 lakh, and taxes paid of ₹110 lakh. It spends ₹220 lakh on capex and draws ₹150 lakh of fresh borrowings while repaying ₹180 lakh of old debt, paying ₹58 lakh of interest (classified as financing) and ₹40 lakh of dividends. Opening cash is ₹85 lakh.

Inputs

Operating profit before WC changesPBT ₹480 L + addbacks ≈ ₹651 L

Working capital movement−₹70 L − ₹40 L + ₹35 L = −₹75 L

Cash generated from operations≈ ₹576 L, less taxes paid ₹110 L

Output

Net cash from operating activities≈ ₹466 L

Net cash from investing activities≈ −₹204 L

Net cash from financing activities≈ −₹128 L

Closing cash (opening ₹85 L + net change)≈ ₹219 L

Each section nets independently, and the three net figures plus the opening balance must tie to the closing cash and cash equivalents on the balance sheet. A mismatch usually means a working-capital delta, a non-cash addback, or an investing/financing cash movement was missed or double-counted — check bank overdraft treatment and restricted cash first.

Common mistakes

Forgetting to remove finance cost and profit on sale from the operating base

Finance cost and profit/loss on sale of assets sit inside PBT but belong to financing and investing respectively. Skipping the add-back/deduction step overstates or understates operating cash flow and double-counts (or omits) the amount in its correct section.

Getting the sign wrong on working capital deltas

An increase in a current asset (receivables, inventory) is a USE of cash — deduct it. An increase in a current liability (payables) is a SOURCE of cash — add it. Reversing the signs is the most common indirect-method error.

Assuming Ind AS 7's interest-paid choice also applies under AS 3

AS 3 (para 30) hard-codes interest paid to financing, and interest/dividends received to investing, for any entity other than a financial enterprise — there is no choice under AS 3. Ind AS 7 (para 33) is the one that leaves it optional, permitting operating or financing (and operating or investing for interest/dividends received) as a consistent accounting policy. Carrying the Ind AS 7 either/or into an AS 3 statement misstates the classification.

Preparing a cash flow statement for an exempt entity without checking the current-year classification

The Section 2(40) exemption (OPC, small company, dormant company, start-up private company) is tested against that year's facts — a company that was "small" last year may have crossed the Section 2(85) thresholds this year and lost the exemption.

Missing restricted / earmarked cash in the opening-to-closing tie-out

Cash and cash equivalents for the statement should match the balance sheet figure, including bank balances that are restricted (e.g. unspent CSR account, unpaid dividend account) only if the entity's policy includes them — disclose the composition and any restrictions in the notes.

Frequently asked questions

What is the difference between the direct and indirect method?+

The direct method discloses major classes of gross cash receipts and payments for operating activities. The indirect method starts from profit before tax and adjusts for non-cash items, non-operating items and working-capital movements to arrive at the same net operating cash flow. Both AS 3 and Ind AS 7 permit either method for the operating section; investing and financing activities are always presented on a gross basis (with limited netting exceptions) regardless of method.

Is interest paid an operating or a financing cash flow?+

It depends on which standard applies. Under AS 3 (para 30), an entity other than a financial enterprise has no choice — interest paid must be classified as financing. Under Ind AS 7 (para 33), the same entity type may classify interest paid as either operating (it enters into the determination of profit or loss) or financing (a cost of obtaining financial resources), applied consistently as an accounting policy. Financial enterprises/institutions classify interest paid as operating under both frameworks.

Where do interest and dividends received go?+

The same AS 3 vs Ind AS 7 split applies. AS 3 mandates investing for an entity other than a financial enterprise — there is no choice. Ind AS 7 permits either operating or investing for the same entity type, as a consistent accounting policy. Financial enterprises/institutions show them as operating under both frameworks.

Which companies are exempt from preparing a cash flow statement?+

Under the proviso to Section 2(40) of the Companies Act 2013, One Person Companies, small companies (Section 2(85)), dormant companies (Section 455), and private companies that are start-ups need not include a cash flow statement in their financial statements. All other companies must present one.

Why doesn't my computed closing cash match the balance sheet?+

Common causes: a working-capital delta sign error, a non-cash item left inside an operating addback without removing its real cash-flow section counterpart, restricted/earmarked cash included inconsistently between opening and closing, or a financing/investing item (e.g. a non-cash share swap, or a bonus issue) that should be disclosed as a non-cash transaction rather than flow through the statement.

Are bank overdrafts part of cash and cash equivalents?+

Where a bank overdraft is repayable on demand and forms an integral part of the entity's cash management (fluctuating between debit and credit), both AS 3 and Ind AS 7 permit including it as a component of cash and cash equivalents. Otherwise it is a financing item. Disclose the policy followed.

Authoritative sources

ICAI

AS 3 — Cash Flow Statements — Applicable to companies not covered by the Ind AS roadmap. Paragraph 30 mandates interest paid as financing and interest/dividends received as investing for an entity other than a financial enterprise (operating only for financial enterprises) — there is no policy choice under AS 3.

ICAI

Ind AS 7 — Statement of Cash Flows — The Ind AS equivalent; paragraph 33 (as currently notified for India) permits interest paid to be classified as either operating or financing, and interest/dividends received as either operating or investing, for an entity other than a financial institution, as a consistent accounting policy.

MCA

Companies Act 2013, Section 2(40) — Defines "financial statement" and, by proviso, exempts OPCs, small companies, dormant companies and start-up private companies from including a cash flow statement.

Always confirm against the latest version of the source. Regulations evolve and amendments are common.

Related calculators

Trade receivables ageing analyzer →Schedule III ratio calculator →Net worth calculator →ECL (Ind AS 109) calculator →

Share this tool

Last reviewed: 2026-07-29 · For informational purposes only — not professional advice.