Explain the Concept of Earned Value and Illustrate It with Hypothetical

question 65

Essay

Explain the concept of Earned Value and illustrate it with hypothetical values.

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Definitions:

Operating Activities Section

A part of a company's cash flow statement that shows the cash flow from its core business operations.

Direct Method

A method of computing the net cash provided by operating activities in which the income statement is reconstructed on a cash basis from top to bottom.

Indirect Method

A method of computing the net cash provided by operating activities that starts with net income and adjusts it to a cash basis. It is also known as the reconciliation method.

Inventory

Raw materials, work-in-process, and finished goods that a company holds with the intent to sell or use in production.