hich of the following is NOT true about the working capital turnover a) Its formula is Net Sales / average working capital b) It shows how fast the current assets are converted from cash to inventories ,to receivables and back to cash again c) Its formula is Net Sales / average current assets d) It shows how fast the current assets are sold

hich of the following is NOT true about the working capital turnover a) Its formula is Net Sales / average working capital b) It shows how fast the current assets are converted from cash to inventories ,to receivables and back to cash again c) Its formula is Net Sales / average current assets d) It shows how fast the current assets are sold

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 20MCQ

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Calculating Cash Flow From Assets by= Operating Cash Flow (OCF) – Net Capital Spending (NCS) - Change in NWC (ΔNWC)= Earnings Before interest and taxes + Depreciation –Taxes - New fixed assets – Old fixed assets +Depreciation - ((New current assets – New current liabilities)-(Old current assets – Old current liabilities))
Why does an increase in the ratio of current assets to total assets decrease both profits and risk as measured by net working capital? How does changes in the ratio of current liabilities to total assets affect profitability and risk?
Net working capital increases when: A. a credit customer pays for his or her purchase B. inventory is sold at cost. C. fixed assets are purchased for cash D. inventory is purchased on credit
Which of the following scenarios can increase the return on assets? a. Increase the current and quick ratio b. Increase the profit margin, other things equal c. Other things equal, increase the amount of assets used d. Other thing equal, decrease the turnover of assets
When calculating an i* value, all net positive cash flows are assumed to be reinvested at:a. the current market interest rate.b. the i* rate.c. the company’s MARR.d. the company’s cost of capital.
How is it the operating Cash flow is positive if Earnings Before Interest and Tax is a negative figure if the formula is EBIT+Depreciation -Tax. kindly explain that calculation for operating Cash Flow
In cash flow statement, increase in current asset [A] increases cash [B] decreases cash [C] increases working capital [D] decreases working capital
An increase in net working capital causes a. A cash inflow b. A cash outflow c. Does not affect cash flow d. Depends on upon accrual accounting
Which one of them will lead to increase in CFFA (cash flow from assets), other things staying constant Select one: a.Decrease in tax rate b.Increase in net capital spending (NCS) c.Increase in dividends paid d.Decrease in operating cash flow (OCF)
6) ratios compare current assets to current liabilities to indicate the speed with which a company can turn its assets into cash to meet debts as they fall due. A) Debt B) Current C) Liquidity D) Asset utilization E) Profitability
The operating cash flow is? The capital spending is? The change in net working capital is? The cash flow from assets is?
Which of the following is NOT a reason why cash flow may not equal net income? O a. Capital expenditures are not recorded on the income statement. O b. Changes in inventory will change cash flows but not income. O c. Amortization is added in when calculating net income. O d. Depreciation is deducted when calculating net income.