Question

Which is the correct starting point from the firm’s income statement in the cash flow analysis?...

Which is the correct starting point from the firm’s income statement in the cash flow analysis?

Net income before interest and tax payment

Cash flow for balance sheet changes from operations

Cash flow from after investing activities

Cash flow after financing activities

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Answer #1

Starting point in preparation of cash flow statement is Net Income or Net Income before interest and taxes adjusted with changes in working capital and Non-cash expenditure to arrive at Cash flow from Operating Activities.

Answer is Net income before interest and tax payment.

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