usually i Use direct cash flow for our internal reporting just to get the approval from the management and to show th net situation after all the receipts and payments. Do we need fund from external source or if we have excess fund, i share my ideas. For this purpose, I usally prepare the direct cash flow but it will not help the management in detail to know where these money came from. To a certain extent yes but not in detailed.
Whereas the Indirect cash flow method will give a detailed explanation on how the funds are came in and did our operations goes well in terms of cash. It will also help us to know the cash generated from operating, investing & financing activitiy during the period. We uses this for external reporting to the board members and shareholders.
