A Statement of Cash Flows Allows a Financial Analyst to Determine

question 15

Multiple Choice

A statement of cash flows allows a financial analyst to determine:

• A) whether a cash dividend is affordable.
• B) how increase in asset accounts have been financed.
• C) whether long-term assets are being financed with long-term or short-term financing.
• D) all of the choices are correct.

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Definitions:

Profits

The financial gain obtained when revenues generated from business activities exceed the expenses, costs, and taxes needed to sustain those activities.

Losses

Financial conditions reflecting that expenses have exceeded revenues, resulting in a negative net income.

Annual Salary

The total amount of money an employee is paid over the course of a year for their work, typically expressed as a yearly sum rather than hourly wages.

Partnership

A partnership is a legal form of business operation between two or more individuals who share management and profits.