What Indications Can Be Derived from a Firm's Balance Sheet

question 49

Multiple Choice

What indications can be derived from a firm's balance sheet and income statement when researching the firm as a stock option?

• A)Liquidity and financial leverage
• B)Income over liabilities ratios
• C)Bankruptcy risk
• D)P/E yield

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Definitions:

Operating Activities

The portion of cash flow that relates to the core operations of a business, including cash receipts from sales and cash payments for goods and services.

Payment Of Dividends

The allocation of part of a corporation's profits to its shareholders, as decided by the corporation's board of directors.

Financing Activities

This term refers to transactions and events through which a business raises funds to operate and expand, such as issuing debt or selling equity.

Purchase Of Equipment

The acquisition of equipment that a business requires for its operations, treated as a capital expenditure.