Ind AS 7 / AS 3

Indirect Method Cash Flow Statement Calculator

Reviewed by CA Divyanshu Sengar · Last reviewed 11 October 2026

Reconcile profit before tax to operating cash flow, add investing and financing cash flows, and check the implied closing cash against the actual bank and cash balance.

Enter your figures

The fields start with sample figures. Replace them with your own; nothing is sent to a server.

Loading the calculator…

How the calculation works

Operating cash flow = profit before tax + depreciation − gain on sale of assets + finance cost − increase in receivables − increase in inventory + increase in payables − income tax paid.
Investing cash flow = cash proceeds from asset sales − capital expenditure paid.
Financing cash flow = new borrowings − principal repaid + new equity − dividends paid − interest paid.
Implied closing cash = opening cash + operating + investing + financing. The last metric compares this with the actual closing balance; it should be zero.

Worked example

Profit before tax ₹4,00,000 plus depreciation ₹60,000, less the ₹10,000 gain on sale, plus finance cost ₹30,000, less the increases in receivables (₹90,000) and inventory (₹30,000), plus the increase in payables ₹40,000, less tax paid ₹45,000, gives operating cash flow of ₹3,55,000. Capex of ₹1,80,000 less sale proceeds of ₹40,000 gives investing outflow of ₹1,40,000. New borrowings ₹50,000 and equity ₹1,00,000 less repayment ₹80,000 and interest ₹30,000 give financing inflow of ₹40,000. Net movement is ₹2,55,000; added to opening cash of ₹80,000 this gives ₹3,35,000, which matches the actual closing cash.

Assumptions and what this calculator does not cover

Interest paid is shown under financing and finance cost is added back in operations, which is an accounting-policy choice; apply the same policy every year.
Enter increases as positive numbers and decreases as negative numbers for receivables, inventory and payables.
Foreign-currency effects, non-cash investing and financing items and cash equivalents are not modelled.

Frequently asked questions

Why is finance cost added back in operating activities?

Because interest paid is presented in financing activities here, the finance cost charged in profit is added back so it is not counted twice.

What if the reconciliation difference is not zero?

Check the signs of the working-capital movements, whether tax paid equals the tax cash outflow rather than the tax expense, and whether any non-cash items (for example assets bought on credit) were included in capex.

Does this follow Ind AS 7 or AS 3?

The structure (operating, investing, financing under the indirect method) is common to both. Presentation choices such as where interest and dividends are classified need to follow your reporting framework.

Official sources and further reading

Rates and rules were checked against these sources on 11 October 2026. Notifications and standards change; confirm on the official site before you file, book or advise.

Educational working tool. Results follow the scope and assumptions above and the figures you enter; they are not tax, audit, legal or accounting advice. Tax and accounting treatment depends on facts and on the law or standard in force for the relevant period, so verify the official source or consult a professional before you rely on a result.

Last reviewed: 11 October 2026

Guides that use this calculator

Background, worked examples and the rules behind these numbers.