The Statement of Cash Flows Classifies Cash Receipts and Payments

question 39

True/False

The statement of cash flows classifies cash receipts and payments as operating, nonoperating, and financial activities.

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Definitions:

Financial Leverage

Engaging borrowed assets to increase the anticipated yield from an investment.

Operating Leverage

The degree to which a company uses fixed operating costs, where a higher degree indicates that a small change in sales will have a larger impact on operating income.

Capital Structure

The mix of a company's long-term debt, specific short-term debt, common equity, and preferred equity, which is a significant factor in determining a company's financial health and risk level.

Cost Structure

The composition of fixed and variable costs that a company incurs in the process of producing goods or services.