Dakota Telescopes Company Uses the Indirect Method to Prepare the Statement

question 166

Essay

Dakota Telescopes Company uses the indirect method to prepare the statement of cash flows.Refer to the following income statement:


Additional information provided by the company includes the following:
Current assets other than cash decreased by $25,000.
Current liabilities increased by $3,000.
Prepare the operating activities section of the statement of cash flows.

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Definitions:

After-Tax Cost

The net cost of an investment after the reduction of any taxes that are applicable to it, reflecting the actual cost to the investor.

WACC

The Weighted Average Cost of Capital, a calculation of a firm's cost of capital in which each category of capital is proportionately weighted.

Retained Earnings

The portion of net earnings not paid out as dividends but retained by the company to be reinvested in its core business or to pay debt.

CAPM Approach

The Capital Asset Pricing Model, a formula used to determine the expected return of an investment based on its risk relative to the market.