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A firm’s earnings are a true representation of cash flows available to the stockholders.
- A) True
- B) False
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- True or False A ratio that can be useful in analyzing a company's cash and liquidity is the operating cash flow ratio.Trur or False? The Cash flow received from the firm's assets must equal the cash flows to the firm's creditors and stockholders?Three commonly used measures of solvency are the debt-to-equity ratio, the times interest earned ratio, and the cash coverage ratio a. Issued shares in exchange for equipment for $500,000 b. Issued bonds at par for $1 million cash. C. Previously declared dividends are paid in cash, d. Accrued interest expense is recorded. e. A customer pays money on his Account recelvable. Requlred: For each of the above transactions, determıne whether the measure will increase, decrease, or not change. Assume that all ratios are higher than 1. (Hint: Dividends pald are considered a financing activity) Debt to equity ratio Times Interest Earned ratio Cash Coverage Transaction ratio a b. C. d.
- True or false, does the statement of cash flows explains the difference between net income and the change in the cash balance? True or false, investors and management use the statement of cash flows to evaluate a firm's profitability? True or false, the financing activities section of the statement of cash flows includes paying dividends and paying off loans?Does net income represent a supply of cash that could be dis-tributed to stockholders in the form of dividends? Explain.Th e most stringent test of a company’s liquidity is its:A . cash ratio.
- How does the declaration of a cash dividend affect a company’s assets, liabilities, and equity?a. It results in an increase to liabilities and a decrease to stockholders’ equity, while assetsremain the same.b. It results in an increase to liabilities and a decrease to assets, while stockholders’ equityremains the same.c. It results in an increase to assets and a decrease to liabilities, while stockholders’ equityremains the same.d. It results in an increase to stockholders’ equity and a decrease to assets, while liabilitiesremain the sameCash flow from financing activities is affected by: Select one: O a. Issuing or reacquiring shares. b. net income c. buying or selling inventory d. buying or selling assetsWhich one of the following is a principal function of the statement of cash flows? a. To predict the ability to pay debts and dividends b. To evaluate the level of debt and leverage of a company c. To calculate the turnover of inventory d. To predict future profit growth
- TRUE OR FALSE The balance sheet indicates the critical nature of the cash flow to the operation of the firm.a. Where should a declared but unpaid cash dividend be reported on the balance sheet?b. Where should a declared but unissued stock dividend be reported on the balance sheet?Which of the following items could appear in a company's cash flow statement? 1. Proposed dividends. 2. Rights issue of shares. 3. Bonus issue of shares 4. Repayment of loan.