If a Company's Net Cash Flows from Operating Activities Is

question 35

Multiple Choice

If a company's net cash flows from operating activities is $1,500,000 for a year and its end of the year cash and cash equivalents balance is $750,000, determine the company's ratio of cash to monthly cash expenses.

• A) 6 months
• B) 2 months
• C) 5 months
• D) 9 months

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Definitions:

Capital Balances

The amounts recorded in the equity section of a company's balance sheet, representing the capital invested by the owners.

Additional Investment

Funds invested into a company or assets beyond the initial expenditure, often to support growth, cover operational costs, or finance new projects.

Ending Balances

The final amount in an account at the end of an accounting period, after all transactions have been accounted for, which becomes the beginning balance for the next period.

Capital Deficiency

A situation where a company's total capital is less than the par value of its capital stock.