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Girard  (p. 9-22)

Cooper (p. 23-32)

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Coulmas-Law (p.42-46)

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JOURNAL OF ACCOUNTING AND FINANCE

The Statement of Cash Flows: An Indirect to Direct Conversion

Tool to Enhance User Understanding and Analysis

Author(s): Taylor W. Foster III, L. Kevin McNelis, William L. Smith

Citation: Taylor W. Foster III, L. Kevin McNelis, William L. Smith, (2012) "The Statement of Cash Flows: An Indirect to Direct Conversion Tool to Enhance User Understanding and Analysis," Vol. 12, Iss. 2, pp. 94 - 119

Article Type: Research paper

Publisher: North American Business Press

Abstract:

Statement of Financial Accounting Standards (SFAS) 95 expressed a preference for the direct method approach for reporting operating cash flows; however, the indirect method approach is widely used. We supply a tool that enables users to compute the major direct method components from indirect method disclosures and thereby enhance user understanding. We apply our conversion tool to a set of companies from a variety of industries that voluntarily report under the direct approach with encouraging results.This timely study contributes to the continuing format debate in light of the Securities and Exchange Commission's (SEC) roadmap to International Financial Reporting Standards (IFRS).