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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