Analysis of the Financing Activities Section of the Statement of Cash

question 127

Multiple Choice

Analysis of the financing activities section of the statement of cash flows will disclose

• A)the extent of investments in plant and equipment.
• B)net income for the period.
• C)purchases and sales of treasury stock.
• D)the amount of money loaned to others.

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Definitions:

Factoring

A financial transaction and a type of debtor finance where a business sells its accounts receivable to a third party (the factor) at a discount.

Net Working Capital

measures a company's short-term financial health by subtracting its current liabilities from its current assets, indicating the liquidity available to fund day-to-day operations.

Accounts Receivable

Unsettled financial obligations to a corporation from its customers for products or services already delivered or engaged in, awaiting payment.

Accounts Payable

Money owed by a business to its suppliers shown as a liability on the company’s balance sheet.