Creditors Analyze the Statement of Cash Flows to Determine

question 102

Multiple Choice

Creditors analyze the statement of cash flows to determine:

• A)total interest earned during the period.
• B)the quality of the company's earnings.
• C)whether or not the company can pay interest on debt.
• D)if management was overpaid.

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Definitions:

Plan Assets

Plan assets refer to the pool of assets that are held by a pension fund or other employee benefit plan to fund the benefits owed to participants.

Discount Rate

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

Expected Long-Term Rate

An estimate of the rate of return or interest rate over a long-term investment or obligation.

Net Gain Or Loss

The overall financial result after all revenues are added and all expenses are subtracted.