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

Accounting for financial instruments, The IASB is in the procedure of under...

The IASB is in the procedure of undertaking a comprehensive review of accounting for financial instruments, and has issued a latest financial instruments standard referred to as IF

Calculate total asset turnover and return on equity ratio, Given the follow...

Given the following information for Tandoori Grill Restaurant, calculate the total asset turnover and return on equity ratios: Net Profit Margin 8% Return on Assets 15% Debt R

Double declining balance method , Suppose that the business uses the double...

Suppose that the business uses the double declining balance method to depreciate  its equipment (a)  Determine the net book value, depreciation expense, and accumulated deprecia

Event-driven strategies-investment strategy of hedge funds, Event-Driven St...

Event-Driven Strategies : These strategies are solely focus on events of corporate life cycle for investing. They involve significant opportunities created by corporate events such

Explain the determinants of operating exposure, Explain the determinants of...

Explain the determinants of operating exposure. Answer:  The main determinants of a company’s operating exposure are (a) The structure of the markets where the company sourc

Breaks in specific cost of capital, Breaks in Specific Cost of Capital: Th...

Breaks in Specific Cost of Capital: The specific costs of capital may also be affected by the amount of finance the firm wants to raise. As the amount of financing increases, the

Accounting principles board, Q. Accounting Principles Board ? Accountin...

Q. Accounting Principles Board ? Accounting Principles Board (APB) -senior technical committee of AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA) that issued pronoun

Rate changes and duration estimate, To calculate duration, we need to...

To calculate duration, we need to first obtain the values for V - and V + where V - is the price when the yield decreases by certain number of basis points and V +

Calculate the investment in a project, BAGS, Inc. is considering an investm...

BAGS, Inc. is considering an investment in a new project. The required investment is $1,000,000. After-tax net cash flows are expected to be $50,000 the first year and are expected

Strategy of financial globalization, Question 1: (a) Highlight the mai...

Question 1: (a) Highlight the main benefits which Mauritius can reap from a strategy of financial globalization. (b) What are the problems with the internationalization of

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