A Direct Method of cash flow calculates operations directly from scratch whereas an Indirect Method is that cash flow from operations which is calculated by taking the net income of the company and adjusting it.Companies use direct method at minimum to make a separate report for classifying operating cash receipts and payments. It also provides future evidence related to company's operating cash receipts and payments. In indirect method of cash flow operating cash flow very according to the change in the balance sheet with respect to the period, the distribution of assets and liabilities, its net income etc. I think the indirect method provides better information. The indirect method solves for cash flows by identifying non-cash transactions that are included in net-income calculation, and then excluding them from computing cash flows. A major advantage of the indirect method of cash flows is that the method provides reconciliation between net income and cash flows. The indirect method also helps financial-statement users better understand different linkages among financial statements and is a simple way of preparing the statement of cash flows. This method is theoretically best, as it reconciles the accrual-based accounting net income with the actual cash flows from operating activities, showing how it may be different between a company's stated profitability and its cash holding position. Net income often includes revenues from sales on credit without cash collected from customers, resulting in a better income number but without contributing more to cash flows. Net income also considers of any non-cash expenses that reduce net income as reported but don't affect cash flows as they currently stand.

Questsion:

do you think the information presented in the operating section of a direct method cash flow statement is irrelevant to investors?