#1
Which section of the cash flow statement reports the company's cash activities from its primary business operations?
Operating activities
ExplanationReports cash activities from core business operations.
#2
What does a positive cash flow from operating activities indicate?
The company is generating sufficient cash to cover its day-to-day expenses.
ExplanationSufficient cash to cover daily expenses.
#3
What does the cash flow statement measure?
Movement of cash in and out of a company
ExplanationTracks cash movement in and out.
#4
Which financial statement helps in assessing a company's liquidity?
Cash flow statement
ExplanationAssesses liquidity.
#5
Which financial statement helps in assessing a company's profitability?
Income statement
ExplanationAssesses profitability.
#6
How is free cash flow calculated?
Operating Cash Flow - Capital Expenditures
ExplanationOperating cash flow minus capital expenditures.
#7
Which of the following is considered an investing activity in the cash flow statement?
Purchase of equipment
ExplanationBuying equipment is an investing activity.
#8
In the cash flow statement, what is the formula for free cash flow?
Operating Cash Flow - Capital Expenditures
ExplanationOperating cash flow minus capital expenditures.
#9
Which of the following is a cash outflow from financing activities?
Issuance of bonds
ExplanationIssuing bonds is a financing outflow.
#10
Which of the following is a cash outflow from investing activities?
Sale of equipment
ExplanationSelling equipment is an investing outflow.
#11
What does a negative cash flow from financing activities indicate?
The company is paying off its long-term debt.
ExplanationPaying off long-term debt.
#12
What does a high free cash flow to equity (FCFE) indicate?
The company has a strong ability to pay dividends to shareholders.
ExplanationStrong ability to pay dividends.
#13
What does a positive cash flow from financing activities indicate?
The company is raising capital through debt or equity.
ExplanationRaising capital through debt/equity.
#14
Which financial ratio measures a company's ability to generate earnings from its investments in assets?
Return on assets (ROA)
ExplanationMeasures earnings from asset investments.