An analyst wants to compare the cash flows of two United States companies, one that reports cash flow using the direct method and one that reports it using the indirect method. The analyst is most likely to ________.
1) convert the indirect statement to the direct method to compare the firms cash expenditures.
2) adjust the reported CFO of the firm that reports under the direct method for depreciation and amortization expense.
3) Increase CFI for any dividends reported as investing CF by the firm reporting under the direct method.