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:

Marginal Productivity

The additional output that can be produced by adding one more unit of a specific input, keeping all other inputs constant.

Perfectly Competitive

A type of market where numerous small firms compete against each other offering products that are virtually interchangeable and where no single company can dictate the market price.

Marginal Productivity

The additional output that is produced by employing one more unit of a particular input, holding other inputs constant.

Income Distribution

The way in which total income is shared among the population or different groups within society.