Match These Terms with Their Correct Definition

question 21

Multiple Choice

Match these terms with their correct definition.
-Measures the company's ability to meet its maturing debt obligations

• A)Cash flow adequacy ratio
• B)Cash flows from financing activities
• C)Cash flows from investing activities
• D)Cash flow from operating activities
• E)Direct method
• F)Free cash flow
• G)Income statement
• H)Indirect method
• I)Noncash investing & financing activities
• J)Statement of cash flows

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Definitions:

Net Capital Spending

The amount spent by a company for maintaining or increasing the scope of its assets, minus any sales of fixed assets during the same period.

Net Working Capital

An evaluation of an entity's liquidity level, which is obtained by the subtraction of current liabilities from current assets.

Earnings Per Share

A company's profit divided by the outstanding shares of its common stock, indicating the company's profitability.

Depreciation Expense

An accounting method that allocates the cost of a tangible asset over its useful life.