Literature reviewJaan Alver, 2005, Preparation and analysis of cash flow statements: the net profit approach and the operating profit approachAccording to this article, the author states that a cash flow statement is essential as part of a comprehensive set of financial statements prepared in accordance with IFRS and US GAAP for all businesses. IAS 7 defines a formal structure for the cash flow statement. Cash flows should be classified under three important headings, namely operating activities, investing activities and financing activities. Cash flow classification is essential to dissecting cash flow information. Net cash flow contains almost no information on its own; it’s the characterization and distinct parts that are illuminating. Although classifying cash flows into three main sections is fundamental, it should be clarified that the guidelines are subjective. IAS 7 has not shown how to characterize certain items that may legitimately fall into more than one of the significant classifications of the cash flow statement. For example, interest and profits allocated could be presented as an operational transaction, despite their close association with other activities presented as investment activities as well as interest and dividends paid can be presented as an operational activity, despite their close association with other activities presented as fundraising activities. Additional problems emerge from the case where there is no particular standard definition of operating activities and therefore of cash flows from operating activities. The IASB and FASB have clarified that operational activities are activities that do not constitute investment or financing exercises. In addition, the association of a ca...... middle of paper ......budget studies of the hospital. The analysis is based on responses from 232 executives to a survey questionnaire sent to Fortune 500 companies in 1986. The companies surveyed follow a company-wide system for generating cash flow data for capital expenditure programs. Specific results provide insight into cash flow estimation practices for different types of projects, the forecasting techniques used, the magnitude of forecast errors encountered, and the inflation adjustment practices of large companies. The study generates insights into the influence of the company's business and financial risks on the cash flow forecasting process of large companies. This article will, we hope, stimulate further research into corporate cash flow forecasting practices, how these practices can be improved, and how cash flow estimation can be improved. the practice is related to the application of capital budgeting techniques.