Common Uses of the Statement of Cash Flows Include All

question 205

Multiple Choice

Common uses of the statement of cash flows include all but which of the following?

• A) Investor assessment of cash flows before buying and selling stock.
• B) Management prediction of future cash flows for decision making.
• C) Management determination of the specific sources and uses of cash.
• D) Creditor evaluation of a company's ability to generate cash to cover debt.
• E) Government assessment of whether company is able to pay taxes as they become due.

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Definitions:

Pre-tax Cost

The cost of an investment or financial activity before any taxes are applied.

After-tax Cost

The actual cost of an investment or loan after accounting for the impact of taxes on the return.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows.

Operating Lease

A rental agreement allowing a company to use an asset without owning it, typically involving shorter terms and cancellable by the lessee.