Direct: Σ receipts − Σ payments. Indirect: profit + depreciation ± working-capital change ± investing ± financing
Direct cash flow shows actual receipts and payments from the banks; indirect starts from accounting profit and adjusts for non-cash items and working-capital changes. Both reach the same change in cash by different routes.
How it is calculated
Direct: Σ receipts − Σ payments, by category. Indirect: profit + depreciation ± change in receivables, inventory and payables ± investing ± financing.
Example with numbers
Profit 50, depreciation 10, receivables up 30 (you collect less than you sell): indirect cash flow = 50 + 10 − 30 = 30. Direct must also give 30 from the period's bank movements; if not, something is missing.
How Fibady does it
Generates both, the indirect from accounting and the direct from classified bank movements, and checks that they reconcile with each other and with the bank balance.