CPDQ 7.1 Guidance
Krishnan and Largay … Provide possible reasons why direct method cash flow data might predict future cash flows better than indirect cash flows.
• Consider differences in cash flow disclosure
o Cash receipts from customers, cash paid to suppliers are
Copyright By PowCoder代写 加微信 powcoder
reported when the direct method is used
• Enables observation and analysis of trends in components of
operating cash flows
o Trend in cash received from customers
o Relationship between cash collected from customers and
• Some cash flow components may have different persistence into
future cash flows than others
o But the indirect method does not present components of cash
flows from operations
• Other readings relevant to answering this question
o Cheng and Hollie (2005); Arthur and Chuang (2006); Clinch et al. (2002); Carslaw and Mills (1991) – consider which ratios require direct method disclosures
程序代写 CS代考 加微信: powcoder QQ: 1823890830 Email: powcoder@163.com