Ashley Couses the Direct Method in Calculating Its Cash Flow from from Operations.Which

question 148

Multiple Choice

Ashley Co.uses the direct method in calculating its cash flow from operations.Which of the following items will not have an effect on cash flow from operating activities?

• A)Increase in inventory.
• B)Payment of dividends to stockholders.
• C)Cash collections from customers.
• D)Payment of interest to lenders.

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Definitions:

IRR

A metric used in financial analysis to estimate the profitability of potential investments, it represents the annualized effective compounded return rate.

Sunk Costs

Costs that have already been incurred and cannot be recovered, and should not influence future business decisions.

Initial Period Cash

The amount of cash available at the beginning of a financial period or the start of a project.

Project Termination

The process of concluding or finalizing a project after its objectives have been achieved or it has been determined that objectives cannot be achieved.