Mastering the Statement of Cash Flows: Direct vs Indirect Method ExplainedBy Dr. Patricia Chen | Published January 13, 2026Here’s a statistic that stops my intermediate accounting students in their tracks: 98% of companies use the indirect method when preparing their statement of cash flows. Yet every semester, I watch students spend equal time learning both methods, wondering why they're mastering a technique that almost nobody uses in practice. I get it. You're studying hard. In 14 years of teaching at the University of Texas, I've heard this question about 600 times: "Professor Chen, if both methods give the same answer, why are we learning both?" And honestly? That's the exact right question to ask. The problem isn't that you're learning both methods. The problem is how you're learning them. Most textbooks treat direct and indirect methods as equals, giving you two parallel paths to the same destination. But that's not how the real world works. Understanding why 98% of companie