Cash flow classification requires separate reporting of operating, investing and financing activities, with prescribed treatment for interest, dividends and non-cash transactions.

Ind AS 7 requires every entity to present a statement of cash flows classifying cash flows into operating, investing and financing activities. Cash equivalents are short-term, highly liquid investments readily convertible to known cash amounts with insignificant value risk. Operating cash flows may use the direct or indirect method; major investing and financing cash receipts and payments are generally reported separately. For entities other than financial institutions, interest paid is classified as financing, interest and dividends received as investing, and dividends paid as financing. Non-cash investing and financing transactions are excluded but separately disclosed.

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