The Statement of Cash Flows Is Helpful to Financial Managers

question 77

Multiple Choice

The Statement of Cash Flows is helpful to financial managers in that:

• A) It calls attention to unusual changes in either the major categories of cash flow or specific items so that the financial manager can pinpoint problems the firm may be having
• B) It calls attention to the expenses deducted to determine net income.
• C) Financial managers can create pro forma statements to determine whether or not the firm will need additional external financing.
• D) All of the above
• E) Both (a) and (c)

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Definitions:

Actual Cost

The final, real amount spent on completing a specific task, project, or acquisition, as opposed to estimated or budgeted costs.

Cost Performance Index

A measure in project management that calculates the financial efficiency and cost control of a project by dividing the earned value by the actual cost.

Schedule Variance

A project management metric that measures the difference between the planned and actual progress of a project.

Earned Value

A project management technique that measures project performance and progress in an objective manner.