Question

How do we get from reported earnings to cash flow?

Answer 1

Cash flow is tohal money into and out of business .

While earning is total business transaction in a business.

Primarily cash flow doesn't accounts for non cash earning and non cash expense while earnings accounts for the same.

So, while calculating Cash flow from an earning we should exclude such earnings and expense which didn't happened at the same financial year and should include advances against a future sale or lessen expenses paid for a future estimated expenses.

This way cash flow can be calculated from earning .

Example is money paid after completion of past closed project will account in cash flow bug willnt be counted in earning as it was already calculated in earning while the sale was done .