DRS 21
Active
Cash flow statement – unified standard with sector-specific annexes
Kapitalflussrechnung
1
Scope – Elaborating §297(1) HGB's Cash Flow Requirement
A single unified standard, not three separate documents
DRS 21 replaced the earlier three-document cluster (general DRS 2, plus credit-institution DRS 2-10 and insurance DRS 2-20, both covered in the withdrawn tier) with ONE standard containing dedicated internal annexes for the sector-specific adaptations – elaborating the Kapitalflussrechnung mandatory content §297(1) HGB requires for capital-market-oriented parents (and voluntary for others), established in detail in the earlier HGB poster series.
2
The Three-Category Structure
Operating, investing, financing
Cash flow from operating activities (laufende Geschäftstätigkeit) Cash flow from investing activities (Investitionstätigkeit) Cash flow from financing activities (Finanzierungstätigkeit)
Sector-specific adaptations (annexes)
Credit institutions present cash flows reflecting the trading-book netting concept established in the earlier HGB credit institutions poster; insurers present cash flows reflecting their own technical-provision-dominated balance sheet structure – both genuinely different from an ordinary trading/manufacturing enterprise's own three-category presentation.
3
Direct vs. Indirect Method – Both Permitted, One Preferred
A genuine choice, with a stated preference
DRS 21 permits BOTH the direct method (showing actual gross cash receipts and payments) and the indirect method (starting from net income and adjusting for non-cash items) for the operating activities section – while explicitly RECOMMENDING the indirect method as the more common and practically manageable approach, particularly given how it more naturally reconciles to the Konzern-GuV already prepared. In practice, the vast majority of German groups use the indirect method.
4
Worked Example – Reconciling Net Income to Operating Cash Flow
Building the indirect-method operating section
A group reports €5,000,000 net income for the year, including €800,000 of depreciation/amortisation (a non-cash expense), a €300,000 increase in trade receivables (cash NOT yet collected), and a €150,000 increase in trade payables (cash NOT yet paid).
Operating cash flow = €5,000,000 + €800,000 (add back non-cash depreciation) − €300,000 (increase in receivables reduces cash) + €150,000 (increase in payables preserves cash) = €5,650,000 – reconciling accrual-basis net income to the group's own genuine cash generation for the period.
5
Relationship to IFRS (IAS 7)
One of the strongest convergence points in the entire DRS library
DRS 21's three-category structure and direct/indirect method choice closely mirror IAS 7 in almost every material respect – genuinely one of the cleanest convergence points this whole poster series (HGB and DRS combined) has documented, reflecting how the cash flow statement's own underlying logic (cash is cash, regardless of accounting framework) leaves comparatively little room for genuine national divergence.