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Although the Direct Method Is Easier to Use,the Financial Accounting

question 175

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Although the direct method is easier to use,the Financial Accounting Standards Board (FASB)prefers the indirect method of reporting cash flows from operating activities.


Definitions:

Investment Turnover

Investment turnover measures how efficiently a company generates sales from its investment in fixed assets.

Profit Margin

The percentage of revenue remaining after all expenses, taxes, and costs have been deducted from total sales.

Return on Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated by dividing the net profit by the cost of the investment.

Gross Profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.

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