The Information in a Statement of Cash Flows Enables Stakeholders

question 36

Multiple Choice

The information in a statement of cash flows enables stakeholders to assess the

• A) amounts, timing and certainty of future cash flows.
• B) liquidity and solvency of an entity.
• C) change in working capital during the period.
• D) reason(s) for the difference between net income and cash flows from financing activities.

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Definitions:

ROE

Return on Equity; a financial ratio that measures the profitability of a firm by dividing net income by shareholder's equity.

Days Sales Outstanding

A measure that calculates the average time it takes for a company to collect payments after a sale has been made.

Accounts Receivable

Funds that customers owe to a business for products or services rendered but for which payment has not yet been received.

Net Sales

Revenue generated from the sale of goods or services, minus returns, allowances, and discounts.