Indirect method: Indirect method is the most widely used method to compute cash (used) provided by operating activities. Under this method net cash flow is determined by adding back noncash expense and losses to net income and deducting all noncash income and gains from net income.
(a) To determine: To determine the methods by C. Co and P. Co. for computing net cash provided by operating activities and their amounts, respectively.
(b) To determine: To determine important items in investing and financing activities reported by C. Co and P. Co in 2014.
(c) To determine: To determine the trends in net cash provided by operating activities over the period 2012 to 2014 for both companies.
(d) To determine: To determine where, what, and why “
(e) To determine: To compute (1) current cash debt coverage ratio and (2) cash debt coverage ratio for both companies in 2014.
(f) To determine: To determine conclusions concerning the management of cash that can be drawn from the ratios computed in above.
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ACP INTERMEDIATE ACCOUNTING VOL. 1 >C
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