Using the Indirect Method

question 83

Multiple Choice

Using the Indirect Method
For the following question(s) , indicate how each transaction described would be classified on a statement of cash flows if the operating activities section is prepared under the indirect method.
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When using the indirect method, where is the issuance of stock to retire a long-term debt shown on the statement of cash flows?

• A) Operating activity
• B) Investing activity
• C) Financing activity
• D) Noncash investing or financing activity

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Definitions:

Price-earnings Ratio

A valuation metric for companies, calculated by dividing the current market price of a stock by its earnings per share (EPS).

Dividend Yield Ratio

A financial ratio that indicates how much a company pays out in dividends each year relative to its stock price, typically expressed as a percentage.

Earnings per Share

A financial ratio that measures the amount of net income earned per share of common stock. It is an indicator of a company's profitability.

Dividend Payout Ratio

The proportion of earnings a company pays to its shareholders in the form of dividends, expressed as a percentage of the company's total earnings.