One of the Benefits of the Statement of Cash Flows

question 111

Multiple Choice

One of the benefits of the statement of cash flows is that it helps users evaluate financial flexibility. Which of the following explanations is a description of financial flexibility?

• A) The nearness to cash of assets and liabilities.
• B) The firm's ability to respond and adapt to financial adversity and unexpected needs and opportunities.
• C) The firm's ability to pay its debts as they mature.
• D) The firm's ability to invest in a number of projects with different objectives and costs.

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Definitions:

Identical Halves

Describes an organism or structure that can be divided into two equal parts that are mirror images of each other, typical of radial symmetry.

Metabolism

The sum of all the chemical processes that occur within a cell or organism; the transformations by which energy and matter are made available for use by the organism. See anabolism and catabolism.

Chemical Reactions

Processes that involve rearrangement of the molecules or ionic structure of substances, resulting in the formation of new products.

Growth

An increase in the size, number, value, or strength of something, often a natural biological process in living organisms involving an increase in cell size or number.