Computing Cash Generated from Operating Activities Is

question 31

Multiple Choice

Computing cash generated from operating activities is

• A)the same for both the direct and indirect methods.
• B)different because the indirect method considers depreciation.
• C)different in that the direct method considers depreciation.
• D)none of the above.

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Definitions:

Firm's Shares

Equity securities issued by a company, representing ownership in the firm and entitling holders to dividends and voting rights.

Creditors

People or organizations that provide loans or credit to others with the anticipation of receiving payment back later on.

NPVGO

Net Present Value of Growth Opportunities; a valuation method that calculates the present value of investment opportunities a company is expected to undertake in the future.

Above Average P/E Multiple

A valuation metric indicating that a company's current share price is higher relative to its per-share earnings than the industry or overall market average.