Exam 17: Statement of Cash Flows Analysis and Earnings Quality

IFRS GAAP requirement that a statement of cash flows be reported (in one of two standard formats)by all business entities is logical because

Which of the following patterns of cash flow best describes that of a fast growing dynamic firm in a high technology,fast changing industrial sector: Cash flow from operations Cash flow from investing Cash flow from financing

Which of the following action is unlikely to help a business entity increase its cash flow from operations?

A business entity that shows a positive cash flow from operations,a negative cash flow (i.e. ,a cash outflow)from investing and a negative cash flow (i.e. ,a cash outflow)from financing is a business entity which:

What ratio is used to calculate 'cash flow yield'?

A business entity generates a cash flow from operations of 500 in X1,600 in X2 and 700 in X3.The cash outflow from investing is 250 in X1,350 in X2 and 450 in X3 and is only dedicated to the maintenance of the competitive position of the firm.Cash outflow from financing is 150 in X1,-300 in X2 and -600 in X3.What is true of the available cash flow?

A business entity generates a cash flow from operations of 500 in X1,600 in X2 and 700 in X3.The cash outflow from investing is 250 in X1,350 in X2 and 450 in X3.Cash outflow from financing is 150 in X1,-300 in X2 and 900 in X3.Which of the four alternatives below is coherent with these facts and these facts alone.

Generally,the operating cash flow is expected to be positive.

The way IFRS GAAP demand that financial leases be reported encourages firms to:

A business entity is generating small operating losses year after year and has a large positive cash flow from operations year after year.

Which type of business entity is likely to experience a value closest to 1 for their ratio of cash flow from operations to operating income?

Which of the four definitions offered best represents 'Free cash flow' for a business entity:

How is the available cash flow calculated?

The indirect method of calculation of the cash flow from operations consists of the following steps

Of the 4 strategies described below,which one is most likely to lead to the highest increase of the ratio of cash flow from operations to income from operations?

Two independent business entities A and B were created in X0.They are,today ,relatively similar in size and serve similar but separate markets.They report the following time series for their anticipated net cash flow from investing in both tangible and intangible investments (amounts expressed in CU):

The primary impact of the timing difference between the recognition of 'revenue from sales' and the 'cash collected for customers' is on the level of:

Outsourcing can improve the cash flow from operations even if it may deteriorate the profit from operations.

A business entity reports,for a complete accounting period,a cash flow from operations at 12% of sales revenue,a cash flow from investing representing an outflow of 50% of cash flow from operations and a cash inflow from financing is equal to half the absolute value of the cash flow from investing.The gross margin ratio is 40%,net profit at 100 CU represents a quarter of the gross margin.If the beginning cash balance was 45 CU,what is the ending cash balance.

A retailer is paid cash by its customers but pays its suppliers very regularly but no sooner than 60 days of receipt of their invoice.Monthly sales hold steady at 100 units at 5 CU each.The cost of the merchandise is 3 CU per unit.The firm has been in existence for 100 years.By how much will the amount of cash received from customers in January X1 differ from the amount of sales revenue recognized in that month? The retailer closes it books on 30 June each year.