In calculating net cash flow from operating activities using the indirect method, adjustments are made to net income by adding back non-cash expenses such as depreciation and amortization. Additionally, changes in working capital accounts, such as accounts receivable, inventory, and Accounts Payable, are also considered; increases in current assets are subtracted while decreases are added. Similarly, increases in current liabilities are added, and decreases are subtracted. These adjustments provide a clearer picture of cash generated from operating activities.
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