Chapter 12, Problem 5QE

How would the SCF indicate to an investor that the company is experiencing a "cash crunch?"

TRUE OR FALSE 1. A company buys marketable securities when the cash outflows exceed the cash inflows. 2. There is no cost in holding large amounts of cash for business operations. 3. Marketable securities are long-term investments in money market securities.

please answer all the question. 1. Identify two important variables to be considered when making an investment decision. 2. What must a company do in the long run to be able to provide a return to investors and creditors? 3. What is the primary objective of financial accounting? 4. Define net operating cash flows. Briefly explain why periodic net operating cash flows may not be a good indicator of future operating cash flows. 5. What is meant by GAAP? why should all companies follow GAAP in reporting to external users? 6. Explain the roles of the SEC and the FASB in the sitting of accounting standards.

Which of these is a main characteristic of debt capital?(a) Investors in debt participate in the ownership of the firm.(b) Investors in debt are paid interest.(c) Debt is more risky for the investor and less risky for the firm.(d) If dividends are not paid, this can lead to foreclosure, legal proceeding and financial distress.

What is the impact on stockholders equity when a company uses equity financing as a source of funding?

What is the impact on stockholders equity when a company uses debt financing as a source of funding?

What insight does the calculation of free cash flow provide about the companys cash flow position?

How do creditors assess risk when lending funds to a company?