The Information in a Statement of Cash Flows Will Not

question 79

Multiple Choice

The information in a statement of cash flows will not help investors to assess the entity's ability to

• A) generate future cash flows.
• B) obtain favorable borrowing terms at a bank.
• C) pay dividends.
• D) pay its obligations when they become due.

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Definitions:

Residual Dividend Policy

A strategy where a company pays dividends from the residual or leftover equity only after all project capital needs are met.

Dividend Payout Ratios

Dividend payout ratios represent the percentage of a company's earnings paid out to shareholders as dividends, indicating how much money a company returns to shareholders versus retaining it.

High-Growth Firms

Companies that show significantly higher rates of growth in revenue or earnings than the average for their industry or the market as a whole.

Information Content

Information content refers to the degree to which a piece of information can impact an individual's understanding or the market's perception, often used in the context of how financial disclosures affect stock prices.