Which of the following is true? O In preparing a statement of cash flows, the indirect method involves adjusting net income to reconcile it to net cash flows from operating activities. The quick ratio, sometimes called the "acid test." is a more stringent measure of financial leverage than the current ratio. O If a firm's inventory turnover ratio is 3J)r its total assets are three times its annual sales. O The income statement shows the effects of a companys operating, investing, and financing activities on its cash flows.