Adding Gourmet Coffee Stations to My Convenience Store Is Expected

question 148

True/False

Adding gourmet coffee stations to my convenience store is expected to increase sales of my breakfast sandwiches; however,the sales of breakfast sandwiches should not be included in the evaluation of the gourmet coffee project because only relevant,incremental cash flows should be considered.

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Definitions:

Quality of Income Ratio

A metric that measures the proportion of income that comes from core business operations, indicating the reliability of a company's earnings.

Indirect Method

A way of reporting cash flows from operating activities by adjusting net income for changes in balance sheet accounts.

Operating Activities

Transactions that relate to the primary operations of a company, such as sales and service provision.

Indirect Method

A cash flow statement approach that adjusts net income for changes in non-cash working capital and other items to calculate operating cash flow.