TAXYOU editorial · Reviewed 19 October 2026
A profitable sale can remain unpaid, while inventory purchases and debt repayments consume cash. A profit figure alone therefore does not establish how much cash is available to meet commitments.
IAS 7 distinguishes operating, investing and financing cash flows. Its indirect method adjusts profit for non-cash items and timing differences. That distinction provides a useful starting point for understanding why reported profit and cash movements differ.
For a management diagnostic, assemble receivables and payables ageing, inventory records, bank movements and debt commitments. TAXYOU can use these records to examine collection timing, stock commitments and liquidity scenarios. This proposed analysis is separate from preparing an IAS 7 statement.
General guidance for identifying and scoping a requirement. The applicable facts and professional framework determine the work needed for your business.