Ability of Cash Flows from Operations to Cover Current Debt

question 33

Multiple Choice

Ability of cash flows from operations to cover current debt and dividends = ________.

• A)sustainable cash flow from operations/ (current portion of financing debt + dividends)
• B)(sustainable cash flow from operations/ current portion of financing debt) - dividends
• C)(current portion of financing debt + dividends)/ sustainable cash flow from operations
• D)current portion of financing debt + (dividends/ sustainable cash flow from operations)

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Definitions:

Beta

Beta is a measure of a stock's volatility in relation to the overall market; a beta greater than 1 indicates that the stock is more volatile than the market, while a beta less than 1 means it is less volatile.

Regression Line

A straight line that best fits the data points in a scatter plot, used in statistics to model the relationship between two variables.

Security Market Line

A graphical representation used in the Capital Asset Pricing Model to show the relationship between expected return and beta (risk) of an investment.

Required Rates of Return

The lowest yearly return percentage on an investment required to attract individuals or businesses to invest in a specific security or project.