The Method of Preparing the Statement of Cash Flows That

question 48

Multiple Choice

The method of preparing the statement of cash flows that starts with net income and adjusts it for items that affect net income, but do not affect cash is called the:

• A)net income method.
• B)direct method.
• C)indirect method.
• D)non-cash method.

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Definitions:

Growth Rate of Earnings

It is the rate at which a company's earnings are increasing or decreasing over a specific period, often used by investors to gauge the company's profitability trends.

Constant-Growth DDM

A model for valuing a stock by assuming constant dividends that grow at a steady rate indefinitely.

Beta

A gauge for determining the volatility or inherent risk of a security or portfolio against the market at large.

Dividend

A disbursement from a company to its shareholders, commonly in the form of profit distribution.