Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN: 9781305654174
Author: Gary A. Porter, Curtis L. Norton
Publisher: Cengage Learning
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Chapter 12, Problem 12.19E
1.
To determine
Introduction:The ratio that is used to calculate if enough
To calculate:The cash flow adequacy ratio of the company.
2.
To determine
Introduction: The ratio that is used to calculate if enough cash flows are generated by operation to pay off the expenses is termed as cash adequacy ratio. It suggests the ability of a company to cover up its annual cost of debt with the help of cash flow from operations.
To state:The importance of cash adequacy ratio and how the ratio derived in part 1 can be used in determining if a company is eligible for loan or not.
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Financial Accounting: The Impact on Decision Makers
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