Using the Indirect Method, an Increase in Inventory Would Be

question 81

Multiple Choice

Using the indirect method, an increase in inventory would be reported in a statement of cash flows as a(n)

• A) addition to net income in calculating cash flows from operating activities.
• B) deduction from net income in calculating cash flows from operating activities.
• C) cash flow from investing activities.
• D) cash flow from financing activities.

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Definitions:

TSX Rules

The regulations and guidelines set by the Toronto Stock Exchange governing trading, listing, and company conduct.

Debt-Equity Ratio

This financial measure indicates how a company's assets are financed through a mix of shareholders' equity and debt.

Residual Dividend Policy

A strategy where dividends are based on earnings minus funds retained to finance the firm's optimal capital budget.

After-Tax Earnings

The amount of net income a company retains after paying all taxes, representing the true profitability of the company.