Believe it or not, the cash flow statement is actually the easiest of all the financial statements. They just make it complicated in school. Follow these steps:
Subtract the prior year balance sheet from the current year balance sheet. This will give you the change in the BS during the year.
Excluding cash, take the change in the BS from Step 1 and convert it to a cash flow. That is, any net debit to a BS account is a cash outflow. Any net credit to a BS account is a cash outflow.
Categorize each cash flow line item above into each of the three categories: Operating, Financing, Investing
The total of all the three categories in Step 3 should equal the total increase or decrease in cash in Step 1.
Make any necessary adjustments to any cash flows that didn’t require cash or affect both categories simultaneously.
It always works.