Quest Journals

Journal of Research in Business and Management

Volume 5 ~ Issue 4 (2017) pp: 74-79
ISSN(Online) : 2347-3002
www.questjournals.org

Research Paper

Analysisof Cash Flow Operation Methods

*
Rahma Rizal1, Zulkarnain Ilyas Idris2
(Study at Dr. M.M. Dunda Regency Hospital of Gorontalo) Faculty of Economics,
University of Ichsan Gorontalo,
Correspondinng Author: *Rahma Rizal

Received 22 Sep, 2017; Accepted 04 October 2017 Okt, 2017 © The author(s) 2017. Published with
open access at www.questjournals.org

ABSTRACT: The cash flow statement is a report that contains information on the summary of the receipt and
the casual expenditure of the realization of the period of one semester or one semester. The statements of cash
flows are grouped into three groups, ie cash flows from activities. This study only. Research with only Cash
Flow analysis operation is built on Nani.M research (2013) which is the main part of this activity that is in
operating activity report Operating cash flow which is activity and activity of main shoe earnings company.
Operating cash flow is largely derived from repeated activities conducted by the company on a continuous
basis, so that cash flows can already be budgeted earlier. The cash flow calculation technique can use indirect
direct method. The main purpose of this research is to In the same way to be able to know the appropriate
method to be used in Dr.Dunda District General Hospital Gorontalo. Data from the financial statements,
income statements and cash flow Dunda District Gorontalo Hospital period 2012-2015. Data were analyzed
using two methods. The results of this study show that the analysis of cash flow operation using direct increase
method from 2012 (2,197%), 2013 (4.07%,) and 2014 (14 01 01%) but in 2015 decreased (8.52%) also data
presented more and more accurately and more easily understood by users of financial statements. whereas cash
flow analysis using indirect method shows fluctuation flows where in 2012 (5.55%), 2013 (1.33%), 2014 (14 ,
13%) and 2015 (6.97%), so that by management and investors it is difficult to predict its very small and
inaccurate performance due to non data data or method. which greatly affects the flow of operations. method of
analysis. methods for using methods.
Keywords: Operating Cash Flow. Direct Methods, Indirect Methods

I. INTRODUCTION
Financial Report is a tool of accountability that can provide information to the users of both internal
and external financial reports on various economic activities carried out over a period of time. One of the
companies that must present the financial report is Hospital. Hospital both private and government is a unit of
work whose main purpose is to provide health services to the general public. In providing medical services to
the public, hospitals certainly want to earn profits, but hospitals as a nonprofit organization the rate of
acquisition or achievement of profit is not a top priority, but to be able to assess the ability of the hospital to
manage the sources of funds obtained from stakeholders so that the hospital must can still manage the sources of
funds properly and must be submitted or accountable by the management of the hospital to the stakeholders as
providers / funders in the form of financial reports. The parties who invest funds in companies such as creditors
and investors are concerned about the company's ability to pay its obligations. One indicator of the ability to pay
obligations is liquidity and to assess the company's liquidity is the cash flow shown in the cash flow statement.
According to Erhans (2010: 42), the Statement of cash flows is a report containing information about a summary
of the cash receipts and disbursements of a business entity that occurs during a period of one month or one
semester or one year. Hanafi & Halim (2009: 58) The purpose of the cash flow statement is to provide
information on the cash receipts and payments of the company, information on the cash effect of investment
activities, funding, and company operations over a certain period. Technique of Preparation of Statement of cash
flows According to PSAK No. 45, can use two method that is direct and indirect method. According to PSAK
No. 2 of (2009), cash flow statements (revenues and expenses can be grouped into three groups, ie cash flow
from operating activities, cash flow from investment activities, and cash flow from financing activities. Dunda

*Corresponding Author: *Rahma Rizal 74 | Page

(Study at Dr. M.M. Dunda Regency Hospital of Gorontalo) Faculty of Economics, University of Ichsan
Gorontalo,
 Analysisof Cash Flow Operation Methods

District Gorontalo This research uses two methods to analyze cash flow Operation Research with only analyzing
cash flow operation based on research Nani.M (2013) which reveals that the main difference of both methods in
report activity of operation.

II. HEADING
2.1 Financial statements
At the end of the period the company will make a financial statement containing financial
information such as total assets, total liabilities, total capital, total revenues and total costs / expenses. According
to the Indonesian Institute of Accountants in his book entitled "Financial Accounting Standards", SFAS No. 1 of
2009 that the Complete financial statements usually include balance sheets, income statements, changes in
equity statements (presented in various ways eg cash flow or current reports funds), notes and financial
statements.
2.2 Definition of Cash Flow Statement
According to Erhans (2010: 42) Statement of cash flows is a report that contains information about a
summary of cash receipts and disbursements of a business entity that occurred during one period. Cash flows
provide relevant information about the cash receipts and disbursements of an enterprise from a given period, by
classifying transactions based on operating, investing and financing activities. According to the Indonesian
Institute of Accountants (2002: 5) are cash flows are cash inflows and cash equivalents. Meanwhile, according
to kieso et all (2010: 45) Statement of Cash Flow is a report that provides information.
Hery (2013: 460) defines a cash flow statement reporting the cash inflows as well as the company's
cash outflow over the period. This cash flow statement will provide information on the company's ability to
generate cash from operating activities, investing, paying off liabilities and paying dividends. Statement of cash
flow represents the presentation of cash flow statements from an entity that describes changes in cash and cash
equivalents and the equivalent cash coming from operating activities, investing activities and financing activities
in a certain period. Based on this understanding can be seen that cash flow is the amount of cash flowing in and
out of a company within a certain period. In other words, cash flow is a change that occurs in the amount of cash
the company during a certain period.
2.3. Classification of Cash Flow Statements
The statements of cash flows should report cash flows during certain periods and are classified according to
Skousen (2009):
1. Operation Activity is the company's principal revenue-producing activies and other activities that are not
investment activities and financing activities or the amount of cash flows from operating activities is an
indicator that determines whether a company's operations can generate sufficient cash flow to pay off the
loan, maintain the operating capability of the company, pay dividends, and make new investments without
relying on external funding sources
2. Investment Activities is the acquisition and disposal of long-term assets and other investments that do not
include cash equivalents (PSAK No.2 2009)
3. Financing Activities are activities that result in changes in the amount or composition of capital and
corporate lending (PSAK No.2009) or cash turnover arising from the granting of loans or working capital
loans derived from financial institutions, whether bank or non-bank, sebahgai form credit facilities received
by the company
2.4 Objectives of the Cash Flow Statement
The purpose of the cash flow statement according to Halim (2007: 90) is to provide information on
sources of use, cash changes, and cash equivalents during an accounting period and cash balance including cash
equivalents at the reporting date. The purpose of the cash flow statement according to Smith (2009: .212) is to
provide relevant information regarding the receipt and payment of a company's cash over a period. The purpose
of the cash flow statement according to Khairani (2012: 80) is to provide information to creditors, investors, and
other users regarding:
a. The entity's ability to generate positive net cash flow
b. The ability of the entity to complete its obligations
c. Explain the difference between net income associated with cash payments and receipts
d. Explain the effect of cash transactions and financing transactions, as well as non-cash investments to the
financial position of the company.

2.5 The method used in the cash flow statement

Under PSAK No.2 (2009, p.18) there are two methods: direct method and indirect method. Both of
these methods are only used in cash flow reporting from operating activities, the two methods are as follows:

*Corresponding Author: *Rahma Rizal 75 | Page

 Analysisof Cash Flow Operation Methods

2.5.1 Direct Method

The direct method is a re-examination of any post (or account) loss statement with the aim of reporting
how much cash is received or incurred in connection with the post.Direct methods are invaluable to investors
when predicting future cash flows and future earnings (Orpurt and Zang, 2009).The direct method according to
Mardiasmo (2015) as follows. Operating Cash Flow: Customer acceptance, Payment of supplier,Employee
payments, interest, taxes. The direct method according to Hery (2013: 467) as follows:
Cash receipts from operating activities
Cash receipts from sales ........................................ xxx
Cash receipts from dividends ................................ xxx
Cash receipts from interest .................................... xxx
Cash paid to buy merchandise ......... ……………..(xxx)
Cash issued for prepayment costs ........................ (xxx)
Cash paid for salary / wages of employees ........... (xxx)
Cash paid on loan interest ................................... (xxx)
Cash paid on income tax ............... ... …………(xxx)
Net cash flows generated by operating activities xxx
OrNet cash flows used in operating activities .........(xxx)

2.5.2 Indirect Method

According to Andre (2015) that the indirect method or also called profit statement method is essentially to
reexamine each item (component) income statement with the aim to report how much cash received or paid in
relation to each component of the income statement . The indirect method according to Hery (2013: 466) as
follows:
Net income (loss) ....................................................... xxx
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Amortization of bonds investment discount ............... (xxx)
Amortization of premium bond investments ............... xxx
Allowance for doubtful accounts ................................. xxx
Depreciation of fixed assets ......................................... xxx
Amortization of intangible assets ................................. xxx
Amortization of bond debt discounts .......................... xxx
Amortization of premium bond payable ..................... (xxx)
Gain on sale of fixed assets ................................. … (xxx)
Loss on sale of fixed assets ...........................................xxx
Increase in current assets (other than cash) ................(xxx)
Decrease in current assets (other than cash) .................xxx
Increase in current liabilities ..........................................xxx
Decrease in current liabilities .................................... .. (xxx)
Net cash flows generated by operating activities ............xxx

2.6 Research Methods

This research was conducted at Dr.M.M. Dunda District Gorontalo, with the time of study carried
out approximately 1 year from May 2016 to May 2017. Type of data used in this study is secondary data that is
data in the form of financial statements of general hospital Dr.M.M. Dunda District Gorontalo from 2011-2015.
The Research Model uses two methods in analyzing cash flow Operation. The research framework is as follows:

*Corresponding Author: *Rahma Rizal 76 | Page

 Analysisof Cash Flow Operation Methods

II. Indentations And Equations

Cash is a very important component of assets and greatly affects all transactions that occur because it
applies as a medium of exchange in our economy. Cash is involved directly or indirectly in almost all business
transactions. Cash also becomes so important because individuals, corporations or even governments must
maintain adequate liquidity positions ie they must have sufficient amount of money to repay liabilities at
maturity in order for the entity to continue operating.Cash flow can be divided into 3 ie cash flow from
operating activities, funding and investment. This study focuses only on operating cash flow. The analysis of
operating cash flow statement can use 2 methods namely direct matode and direct tisdak method.

The direct method is a re-examination of any post (or account) loss statement with the aim of reporting how
much cash is received or incurred in connection with the post. This method produces useful information in
estimating future cash flows that can not be generated by an indirect method. This method is also very easy to
understand by the users of financial statements. FASB (1987) discloses that the benefit of reporting using direct
method operating cash flows is to show cash receipts and payments for operations. The use of the direct method
is very valuable to investors because it can predict operating performance and future earnings better. Subani
(2015) who examines the ability to predict cash flows from both direct and indirect methods of predicting future
cash flows finds that the cash flows generated from the direct method are more accurate than the cash flows
generated from the indirect method.

3.1 Cash Flow Analysis Operation using Direct Method

As shown in table 1. The calculation of operating cash flows using direct method, in 2012 operating
cash flow of 2.197%, in 2013 rose by 4.07%, in 2014 increased by 14, 01% and in 2015 fell to 8 , 52%. From
these results it appears that operating cash flow has decreased only in 2015. The decline that occurred in 2015 is
due to an increase in the amount of cash flow in 2014 from Rp 36,779,040,382 to Rp 38,459,254,741 in 2015
and followed by an increase in the number of liabilities smoothly. It appears also in the data grouping table
where almost all of the requested data in the table using the direct method exists, the empty data in the table is
the data on cash receipts from dividends, Cash issued for prepayment costs, Cash paid on loan interest and Cash
paid on income tax. The absence of data after the confirmation section keuangandengan Nangsi mother who
explained that

"Cash receipts data from dividend is not there because dividends according to him is the profit that is
distributed to the investor and we do not distribute dividends because it manages no investors because the
property of the BUMD moreover receive cash from dividends, as well as cash issued for prepaid expenses is not
there cash on interest on loans because it is indeed Rs. It is built and run not from borrowing but the regional
budget "

3.2 Cash Flow Analysis Operation using the Indirect Method

As shown in table 2. the results of operating cash flow calculation using direct method, in 2012
operating cash flow of 5.55%, in 2013 increased by 1.33%, in 2014 increased by 14, 13% and in 2015 fell to
6.97%. From the results of research it appears that the cash flow generated from year to year fluctuated where in
2012 to 2013 experienced a decrease then from 2013 to 2014 has increased so drastic but in 2015 again
decreased. This condition is very much different when compared with the use of direct methods where the
decline in operating cash flow only occurs in 2014 to 2015. So when investors want to predict the cash flow
performance of future operating cash flows and the resulting earnings will experience difficulties due to cash
flow conditions that fluctuate or uncertain. By indirect method which presents data in the form of net income
and net cash flows from operations presented in the cash flow statement are not separated will enable the entry
of non-cash or non-monetary transaction effects and other events that greatly affect the operating cash flow data
such as amortization and depreciation .

3.3 Determination of which method is better used by RS.Umum Dunda

Based on the results of the analysis of the two methods described above it appears that the direct
method seen from the analysis where the operating cash flow shows an increase from 2012 to 2014 but in 2015
decreased but this decrease is still significant because accompanied by an increase in the amount of cash flow
and current liabilities. While the indirect method of operating cash flow performance fluctuated where from
2012 to 2013 has decreased then in 2014 experienced a very sharp increase later in 2015 again experienced a
drastic decline. Then the accuracy of the meode directly is more accurate because the data requested in the use
of the direct method is almost entirely present and that is not present only in cash receipts from dividends, Cash
issued for upfront costs, Cash paid on loan interest and Cash which paid on income tax. While many indirect
methods of data are not found in Rs.Umum Dunda financial statements that have been presented primarily in

*Corresponding Author: *Rahma Rizal 77 | Page

 Analysisof Cash Flow Operation Methods

2012 and 2013 where the data is only data on profit (loss), penurunana value of lancer assets in addition to cash
and impairment of lancar.Sehingga the researcher suggests using the direct method because the first
consideration of operating cash flows by the direct method can assess the performance of the second operating
cash flow can predict earnings in the future as well as more accurate because it can present more valuation data
for operating cash flow.

with a study conducted by Diono (2006) that examines the ability to predict cash flows both
compiled by direct methods and indirect methods to predict future cash flows find that the cash flow generated
from the direct method is more accurate than the cash flow generated from the method indirect. And the
theoretical according to FASB No.95 (1987) that profitability reporting by using direct method operating cash
flow is very valuable for decision makers and investors because it can predict future operating and earnings
performance. The idea is that both direct and indirect methods produce different operating cash flows it is only
in practice that the data on indirect methods include non-monetary operating cash flows such as amortization
that may affect entity changes to non cash cash flow accounts and the existence of ambiguous operating
definitions
IV. Figures and tables

Table 1 The development of Cash Flow operations by using the direct method
RS. GENERAL DUNDA (in percent)
Tahun Trend
Current ratio
Naik Turun
2012 2,197 - -
2013 4,068 1,872 -
2014 14,010 9.942 -
2015 8,518 - 5,492
Sumber : Data Hasil Olahan Tahun 2017

Graph 1 Development Of Operating Cash Flow Rs.Umum Dunda

Table 2 The development of Cash Flow operations by using indirect methods RS. GENERAL DUNDA
(in percent)
Tahun Trend
Current ratio
Naik Turun
2012 2,197 - -
2013 4,068 1,872 -
2014 14,010 9.942 -
2015 8,518 - 5,492
Sumber : Data Hasil Olahan Tahun

Graph 2 Development of Operating Cash Flow Rs.Umum Dunda

*Corresponding Author: *Rahma Rizal 78 | Page

 Analysisof Cash Flow Operation Methods

V. Conclusion
Based on the results of research conducted in Rs General DR.M.M Dunda who examines operating
cash flow from 2012 until the year2015 by using direct and indirect method can be concluded that:
1. Viewed from the analysis of cash flow operations using the direct method that operating cash flow from 2012
to 2014 increased and only in 2015 decreased and the data presented more and more accurate and more easily
understood by users of financial statements.
2. From cash flow analysis using indirect method that operating cash flows fluctuate so that by the management
and investors it is difficult to predict the operating cash flow performance and earnings in the future as well as
the data presented is very little and inaccurate. Due to the existence of non-monetary data or non-cash data such
as amortization that greatly affects the operating cash flow value.
3. Based on the analysis of the two methods used, the researcher concludes and recommends to use cash flow
statement analysis using direct method.
Acknowledgements
Researchers are then expected to conduct research related to non-monetary aspects used in the
measurement of operating cash flows by using direct methods so that not only focuses on financial statement
data alone and can check operating cash flow by comparing state-owned companies with private companies.
focusing on operating cash flow. To that end, the researcher further investigates the cash flows of investment
and funding.

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Rahma Rizal. “Analysisof Cash Flow Operation Methods.” Quest Journals Journal of Research in Business
and Management, vol. 05, no. 04, 2017, pp. 74–79.

*Corresponding Author: *Rahma Rizal 79 | Page