Assume That a Company Chooses the Indirect Method to Determine

question 157

Essay

Assume that a company chooses the indirect method to determine net cash flows from operating activities.
Required:
Part a.Explain why net income is the starting point when the indirect method is used to determine cash flows from operating activities.
Part b.Briefly explain why a company's net income is most likely different in amount than its cash flows from operating activities.

Grasp Immanuel Wallerstein's World-Systems Theory and its classification of global geo-economic zones.

Identify the characteristics of Fordism and Post-Fordism.

Understand David Harvey's critiques of Marxism.

Recognize the debates around analytical Marxism and its relation to Marx's original theories.

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Definitions:

Net Income

The final amount a company keeps as profit after deducting all costs and taxes from its gross revenue.

Marginal Tax Rate

The rate of tax imposed on your income, corresponding to each applicable tax bracket.

Average Tax Rate

Total taxes paid divided by total taxable income.

Net Working Capital

The difference between a company’s current assets and current liabilities, indicating the liquidity of the business.