A company's ability to fund its capital expenditures and dividends from net cash provided by operating activities is measured by flow. (Enter only one word per blank.) Need help? Review these concept resources. Read About the Concept Rate your confidence to submit your answer. High Medium Low ©2024 McGraw Hill. All Rights Reserved. Privacy Center Terms of Use
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Step 1: The ability of a company to fund its capital expenditures and dividends from net cash provided by operating activities is measured by the **free cash flow**. Show more…
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Adequate cash flow is required for a company to support operations, invest in the future, pay down long-term debt and reward shareholders with dividends. Analyzing the Statement of Cash Flow for each round identify the change in cash flow from the previous round and identify the major cause of this change.
Akash M.
Which of the following activities impacts the long-term cash flow? A. Purchase inventory B. Pay taxes C. Pay rent and utilities D. Purchase PP&E Which of the following strategies is most likely to shorten the working capital funding gap? A. Keep more inventory on hand B. Provide discounts for customers C. Extend credit for customers D. Extend payment to suppliers What's the company's working capital funding gap in days based on the information below? Receivable days: 47.2 Inventory days: 34.5 Payable days: 45.6 Days in the period: 365 A. 36.1 B. 41.3 C. 32.9 D. 58.3 The cash conversion cycle measures: A. The number of days it takes for a company to turn its resource inputs into cash B. The composition of inventory in a manufacturing facility C. The number of days cash is in the bank D. The amount of cash needed to cover the operating and investing expenses Calculate the net cash provided by the operating activities based on the information below: Net income: 60,000 Depreciation: 25,000 Increase in accounts receivable: 12,000 Increase in inventory: 8,000 Increase in accounts payable: 15,000 A. 120,000 B. 90,000 C. 70,000 D. 80,000
Supreeta N.
the focus on traditional financial statement is data rather cash flow. however cash flow is important to investors, managers, and stock analysts. therefore corporate decision makers and security analysts need to modify accounts data provided to them. an important modification is the concept of free cash flow(FCF). many analysts regard FCF ads being the single and most important number that can be developed from the accounts statement, even more important than net income. the equation for free cash flow is: FCF={EBIT(1-T)+depreciation and amortization]-[capital expenditures+NE operating working capital] cash flow is the cash flow actually for payment to all investors(stockholders and debtholders) after the company has made investments in fixed assets new products and . a negative FCF means that the company does not have sufficient funds to finance its investments in fixed assets and working capital, and that it will have braise new money in the markets to pay for those investments. negative FCF Is not always bad. if FCF is negative because the company is probably experiencing operating problem. exception to this might be startup companies, companies incurring significant expenses to launch a new product line, and high-ground companies with large capital investments.
Breanna O.
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