Which Statement Concerning the Cash Flow Adequacy Ratio Is Incorrect

question 3

Multiple Choice

Which statement concerning the cash flow adequacy ratio is incorrect?

• A) A ratio of 100% or more over several years indicates an inadequate ability to generate sufficient operating cash to cover requirements.
• B) The ratio assesses the entity's ability to generate sufficient operating cash flow to cover its main cash requirements.
• C) The main requirements for cash from operations is to pay debts, acquire assets and pay dividends.
• D) A fall in the ratio indicates a lower ability to generate operating cash to meet requirements.

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The allocation of resources, usually financial, in the expectation of generating an income or profit, including purchases of financial instruments or capital assets.

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An individual who makes investment decisions based on logic and available information to maximize returns and minimize risk.