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Flashcards in Chapter 2 Deck (5)
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1

income statement

measures profitability

2

primary sources of capital (3)

1. bondholders (receive interest)
2. preferred stockholders (receive dividends)
3. common stockholders (receive dividends after preferred stockholders)

3

price earnings ratio

indicates expectations about the future of a company

4

direct method

every item on the income statement is adjusted from accrual to cash accounting

5

indirect method

required adjustments are made to convert net income to cash flows from operations