What is indirect method, Financial Management

Assignment Help:

What is Indirect method

Indirect method is what you would probably be familiar with. It requires a lot less information to produce it and hence can be argued to be easier method.

With indirect method, profit before taxation (or profit before interest and tax) is taken from income statement and adjusted for non-cash items (that is depreciation, provisions). It's also adjusted for loss or profit on disposal of assets. Other items which will be classified under financing or investing are also adjusted for. Lastly adjustments are made for changes during the period in inventories, trade and other receivables and payables. This requires looking at current and prior year's statement of financial position.

2069_financial management.png


Related Discussions:- What is indirect method

State the significance of the cost of capital, State the Significance of th...

State the Significance of the Cost of Capital It must be recognized at the outset that cost of capital is one of the most difficult and disputed topics in the finance theory.

Explain the importance of supplier appraisal, QUESTION (a) List the fiv...

QUESTION (a) List the five elements of the purchasing mix. (b) Describe briefly the four essential elements of a legally binding contract. (c) Distinguish between perform

Compute the weighted average cost of capital, Q. Compute the weighted avera...

Q. Compute the weighted average cost of capital? A company's subsequent to tax specific cost of capital are as follows: Cost of debt

Define risk adjusted discount rate enhance capital budgeting, Explain how u...

Explain how using a risk-adjusted discount rate enhances capital budgeting decision making compared to by using a single discount rate for all projects? The risk-adjusted disco

Aligning financial reports, Aligning Financial Reports: The primary pur...

Aligning Financial Reports: The primary purposes of financial systems are to provide information to interested parties.  Any reports produced through the financial management p

Illustrate report on net present value, Q. Illustrate report on net present...

Q. Illustrate report on net present value? The NPV of a project is a positive $56000. This point to that using our cost of capital 10% as our discount rate the project is we

Techniques of inventory control, Examine the reasons for holding inventorie...

Examine the reasons for holding inventories by a firm & also discuss the techniques of inventory control

Return enhancement on investment, Return Enhancement can be explained...

Return Enhancement can be explained using following heads: Use of a Valuation Model: An investor having access to a bond valuation model can bu

What is the meaning of deviations, What is the meaning of Deviations De...

What is the meaning of Deviations Deviations must be recorded and investigated regardless of the amount involved and then assess whether deviations are isolated departures or i

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd