- Academic research has found that market rates of return on common stock are the most highly correlated with
net income
- A cash inflow from financing activities includes:
proceeds from issuance of bonds payable
- A company in the growth phase of its product life cycle will normally have the following pattern of cash flows
Negative or positive cash flows from operations, negative cash flows from investing and positive cash flows from financing.
- Adophus, Inc.'s 2010 income statement reported total revenues of $850,000 and total expenses (including $40,000 depreciation) of $720,000. The 2010 balance sheet reported the following: accounts receivable beginning balance of $50,000 and ending balance of $40,000; accounts payable beginning balance of $22,000 and ending balance of $28,000. Therefore, based only on this information and using the indirect method, the 2010 net cash inflow from operating activities was
$186,000
- A firm's cash flows will differ from net income each period for all of the following reasons except
the company is sustaining losses each period
- All of the following are firms that may experience a long lag between the expenditures of cash and the receipt of cash from customers, except
restaurants
- An example of an item that is deducted from net income when preparing the operating activities section of the statement of cash using the indirect method is
income from an investment accounted for using the equity method.
- As a complement to the balance sheet and the income statement, the statement of cash
flows is an informative statement for analysts for all the following reasons except:
The existence of negative cash flows from operations can be eliminated by using this financial statement
- As products move through the maturity phase, companies invest to ___________ productive capacity.
maintain
- Firms with short operating cycles will experience less of a lag between the creation and delivery of their products and the collection of cash from customers because
their cash flow from operations will not differ much from their working capital from operations
