Looking for ways to know how to create a **cash flow statement** **indirect method format **in Excel? We can create a **cash flow statement** in both **direct **and **indirect method format **in Excel. Here, you will find step-by-step explained ways to create a **cash flow statement** **indirect method format **in Excel.

## What Is Cash Flow Statement?

**Cash Flow Statement **is a type of **financial statement** that shows the **inflow **and **outflow **of **cash **and **cash equivalents** of a company during a **period** of **time**. It shows the **cash flow** by going through the main **3 components**: **Operations**, **Investment, **and **Financing**. Thatâ€™s how it creates a **connection **between the **Income Statement** and **Balance Sheet**.

## What Is Cash Flow Statement Indirect Method?

The **Cash Flow Statement Indirect Method** is **created **using the **increase **and **decrease **of **cash **in the **Balance Sheet **and **Income Statement**. It can show **how much **and **from where cash **is **spent **or **earned **in a certain **period**. **Cash Flow Statement Indirect Method** is easy to make as the **information **needed to make it is normally maintained by **accounts **in a business.

## Download Practice Workbook

## 4 Steps to Create Cash Flow Statement Format with Indirect Method in Excel

We have the **Income Statement** and **Balance Sheet** of a company. If you want you can download the **Balance Sheet Temple** from **Microsoft Excel**.

This is the** Income Statement **of the company.

Additionally, this is the** Balance Sheet **of the company.

Now, we will show you how to **create **a** cash flow statement** **indirect method format** in Excel using the information provided in these sheets. Go through the steps given below to do it on your own.

__Step-01:__ Adjusting Net Income for Non-Cash Expenses

In the first step, we will **adjust **the **Net Income** for all **Non-Cash Expense**s provided in the **Income Statement** sheet.

- Firstly, insert the
**Net Income**value in Cell**C8**from the**Income Statemen**t sheet using the following formula.

`='Income Statement'!D21`

- Then,
**add**back the**Non-Cash Expenses**from your dataset. Here, we will**add**the value of**Amortization**and**Depreciation**from the**Income Statemen**t sheet using the following formulas in Cell**C10**and Cell**C11**respectively.

`=-'Income Statement'!D16`

`=-'Income Statement'!D17`

Now, as the values of **Amortization** and **Depreciation** are negative, we added a **negative sign** to add these values.

- After that,
**subtract Gains**and**add Losses**from your dataset.Â Here, we will**add**the value of**Loss on Sales of Franchise Rights**from the**Income Statemen**t sheet using the following formula in Cell**C13**.

`=-'Income Statement'!D19`

Here, as the value of **Loss on Sales of Franchise Rights** is negative, we added a **negative sign** to add this value.

**Read More: ****How to Prepare Daily Cash Flow Statement Format in Excel**

__Step-02:__ Adjusting Assets and Liabilities for Working Capital Adjustments

Now, we will** adjust Assets** and **Liabilities **from the **Balance Shee**t for **working capital adjustments**. Follow the steps given below to do it on your own dataset.

- In the beginning,
**subtract**all the**Increases**in**Current Assets**from the**Balance Sheet**from your dataset. Here, we will**subtract**the value of the**Increase in Account Receivable**from the**Balance Sheet**using the following formula in Cell**C15**.

`=-('Balance Sheet'!D9-'Balance Sheet'!C9)`

In the formula, we used a **negative **sign to **subtract **the **increased **value of the **Account Receivable**.

- Next,
**add**all the**decreases**in**Current Assets**from the**Balance Sheet**from your dataset. Here, we will**add**the values of**decrease**in**Inventory**and**Prepaid Insurance**from the**Balance Sheet**using the following formulas in Cell**C17**and Cell**C18**respectfully.

`=-('Balance Sheet'!D9-'Balance Sheet'!C9)`

`=-('Balance Sheet'!D10-'Balance Sheet'!C10)`

Here, we used a **negative **sign to **add **the **decreased **values of the **Inventory **and **Prepaid Insurance**.

- Afterward,
**add**all the**Increases**in**Current Liabilities**from the**Balance Sheet**from your dataset. Here, we will**add**the values of**Increase**in**Account Payable**and**Income Tax Payable**from the**Balance Sheet**. To do this, we will use the following formulas in Cell**C20**and Cell**C21**.

`='Balance Sheet'!D17-'Balance Sheet'!C17`

`='Balance Sheet'!D21-'Balance Sheet'!C21`

- Then,
**subtract**all the**decreases**in**Current Liabilities**from the**Balance Sheet**from your dataset. Now, we will**subtract**the values of**decrease**in**Wages Payable**and**Unearned Revenue**from the**Balance Sheet**. We will use the following formulas in Cell**C23**and Cell**C24**.

`='Balance Sheet'!D18-'Balance Sheet'!C18`

`='Balance Sheet'!D20-'Balance Sheet'!C20`

- Next, select Cell
**C25**. - After that, insert the following formula.

`=SUM(C8:C24)`

Here, in **the SUM function**, we added the values of Cell range **C8:C24** to get the value of **Cash Flow from Operations**.

- Then, press
**ENTER**. - Finally, you will get the
**Cash Flow from Operations**.

**Read More: ****How to Calculate Operating Cash Flow in Excel (2 Easy Ways)**

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**How to Calculate Payback Period in Excel (With Easy Steps)****Calculate IRR in Excel for Monthly Cash Flow (4 Ways)****How to Create Monthly Cash Flow Statement Format in Excel****Calculate Cumulative Cash Flow in Excel (with Quick Steps)****How to Calculate Future Value of Uneven Cash Flows in Excel**

__Step-03:__ Adding or Subtracting Cash from Investing Activities to Create Cash Flow Statement with Indirect Method

In the third step, we will **add **or **subtract Cash **from **Investing Activities** from the **Balance Sheet**. Go through the steps to do it on your own dataset.

- Firstly,
**subtract**the**increase**in the**Cash used**and**add**the**decrease**in the**Cash got**from**Investments**from the**Balance Sheet**. Here, we will**subtract**the**increase**in the**Cash used to Purchase Equipments**and**add**the**decrease**in the**Cash From Sale of Land**. To do this, we will use the following formulas in Cell**F8**and Cell**F9**respectively.

`=-('Balance Sheet'!D13-'Balance Sheet'!C13)`

`=-('Balance Sheet'!D12-'Balance Sheet'!C12)`

- Then, select Cell
**F10**. - After that, insert the following formula.

`=SUM(F8:F9)`

In the **SUM **function, we added the values of Cell range **F8:F9** to get the value of **Cash Flow from Investments**.

- Then, press
**ENTER**. - Finally, you will get the
**Cash Flow from Investments**.

**Read More: ****How to Create Investment Property Cash Flow Calculator in Excel**

__Step-04:__ Adding or Subtracting Cash from Financing Activities

Now, in the final step, we will **add **or **subtract Cash **from **Financing Activities** from the **Income Statement **and **Balance Sheet**. Follow the steps given below to do it on your own dataset.

- In the beginning,
**add**all the**Increases**in**Note Payable and Shareholderâ€™s Equity**or**subtract**all the**decreases**in**Note Payable and Shareholderâ€™s Equity**from the**Balance Sheet**from your dataset. Now, we will**add**the value of**Increase in LT Note Payable**,**Insurance of Common Stock,**and**Cash from Paid in Capital**from the**Balance**Sheet. To do this, we will use the following formulas in Cell**F13**, Cell**F14,**and Cell**F15**respectively.

`='Balance Sheet'!D22-'Balance Sheet'!C22`

`='Balance Sheet'!D26-'Balance Sheet'!C26`

`='Balance Sheet'!D27-'Balance Sheet'!C27`

- Then, insert the
**Cash to Pay Dividends**value in Cell**F16**from the**Income Statemen**t sheet using the following formula.

`='Income Statement'!D26`

- Then, select Cell
**F17**. - After that, insert the following formula.

`=SUM(F13:F16)`

In the **SUM **function, we added the values of Cell range **F13:F16** to get the value of **Cash Flow from Financing**.

- Then, press
**ENTER**. - Next, you will get the
**Cash Flow from Financing**.

- Then, select Cell
**C27**. - After that, insert the following formula.

`=SUM(C25,F10,F17)`

In the **SUM function**, we added the values of Cell **C25**, Cell **F10, **and Cell **F17 **to get the value of **Total Change in Cash**.

- Now, press
**ENTER**. - Next, you will get the
**Total Change in Cash**.

- Finally, you will get a
**cash flow statement****indirect method format**in Excel.

**Read More: ****Cash Flow Statement Format in Excel for Construction Company**

## Practice Section

In this section, we are giving you the dataset to practice on your own and learn to use these methods.

## Conclusion

So, in this article, you will find a step-by-step way to create a **cash flow statement** **indirect method format **in Excel. Use any of these ways to accomplish the result in this regard. Hope you find this article helpful and informative. Feel free to comment if something seems difficult to understand. Let us know any other approaches which we might have missed here. And, visit **ExcelDemy** for many more articles like this. Thank you!

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