In Interpreting a Statement of Cash Flows, the First Thing

question 115

True/False

In interpreting a statement of cash flows, the first thing a manager should examine is the company's ability to generate cash from operations.

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Definitions:

User Cost

The opportunity cost of using a durable good, which includes depreciation and the foregone interest on the funds tied up in owning the good.

Market Rate

The prevailing price or interest rate for goods, services, or securities in a competitive marketplace.

User Cost

The cost of using a good or service, which includes the opportunity cost of not using the asset in an alternative use.

Opportunity Cost

The cost of choosing one option over another, typically represented by the benefits that could have been gained by choosing the alternative.