Both the Direct Method and the Indirect Method of Computing

question 129

True/False

Both the direct method and the indirect method of computing net cash flow from operating activities convert accrual-based income statement amounts into cash flows.

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Definitions:

Inventory Turnover Ratio

Inventory turnover ratio is a financial metric that measures how many times a company's inventory is sold and replaced over a specific period, indicating efficiency in inventory management.

Net Profit Margin

A financial metric showing the amount of each sales dollar left over after all expenses have been paid.

Cash Coverage Ratio

A financial metric used to evaluate a company's ability to pay its debt obligations using its cash and cash equivalents.

Current Liabilities

Obligations of a company that are due to be settled within one year or one operating cycle, whichever is longer.