How does the annual rate of return differ from other methods? It has more complex calculations. It uses the amounts a company reports on its tax return. It takes into account the time value of money. It does not focus on cash flows.

How does the annual rate of return differ from other methods? It has more complex calculations. It uses the amounts a company reports on its tax return. It takes into account the time value of money. It does not focus on cash flows.

Business/Professional Ethics Directors/Executives/Acct

8th Edition

ISBN:9781337485913

Author:BROOKS

Publisher:BROOKS

Chapter6: Professional Accounting In The Public Interest

Section: Chapter Questions

Problem 18.2EC

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Cash Flow Statement Analysis

A company's cash flow is the movement of its cash inflows and cash outflows. A cash flow statement is prepared to determine changes in an organization's cash position. A cash flow statement shows how much money was generated and spent on the business during the fiscal year. The cash flow analysis is a method of analyzing an organization's investing, financing, and operating activities. A cash flow statement reveals an organization's liquidity and solvency, as well as its ability to change cash flows in the future. It eliminates the other effects of accounting methods by improving the comparability of different organizations' operational performance.

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