Which Statement Concerning the Cash Flow Adequacy Ratio Is Not

question 20

Multiple Choice

Which statement concerning the cash flow adequacy ratio is not correct?

• A) The ratio assesses the entity's ability to generate sufficient operating cash flow to cover its main cash requirements.
• B) The main requirements for cash from operations is to pay debts, acquire assets and pay dividends.
• C) A ratio of 100% or more over several years indicates an inadequate ability to general operating cash to cover requirements.
• D) A fall in the ratio indicates a lower ability to generate operating cash to meet requirements.

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Definitions:

Type A Personality

A temperament characterized by high levels of ambition, aggression, competitiveness, drive, impatience, need for control, focus on time management, and stress.

External Locus

An individual's belief that external forces, beyond their personal control, have a significant impact on their life events and outcomes.

Experience Stress

The emotional or physical strain experienced as a response to challenging or demanding situations.

Cope Effectively

The ability to manage stressful situations or challenges in a way that minimizes negative outcomes and maximizes positive, healthy results.