The statement of cash flows -- particularly the direct method -- identifies the sources and uses of transactions. The middle section in this statement reports investing activities. The purchase and sale of fixed assets and/or investments -- such as marketable securities -- all reside in this section. Calculating the changes in cash flow involves looking at these activities and listing them in the correct order. The statement of cash flows relies on information from a company’s general ledger and income statement for specific dollar amounts.

Step 1.

Review the general ledger and income statement. Note all purchases and sales of fixed assets, primarily property, plant and equipment.

Step 2.

List all cash receipts from the sale of fixed assets. Information should include a brief description of the item sold and dollar amount received from the buyer.

Step 3.

Total the cash receipts for all fixed assets sold. Save this figure for later calculations.

Step 4.

Identify the purchases of all fixed assets. Write down the items purchased and amount paid just below the assets sold list.

Step 5.

Total the amounts paid for all new fixed assets.

Step 6.

Deduct the amount paid for new fixed assets from the cash receipts received from sold fixed assets. The difference -- whether positive or negative -- represents the total cash inflows or outflows from fixed assets for the statement of cash flows.


A gain or loss in the investing section for the statement of cash flows is not 100 percent representative of a company’s total cash flows. The operating and financing sections for the statement of cash flows can also affect total cash flows.