Which group of ratios measures how effectively the firm is using its assets?

Which group of ratios measures how effectively the firm is using its assets?

a. Liquidity ratios.
b. Debt ratios.
c. Efficiency ratios
d. Profitability ratios.

Answer: C

Which of the following items is deducted from net income to arrive at cash flow from operations when using the indirect method?

Which of the following items is deducted from net income to arrive at cash flow from operations when using the indirect method? 

a. depreciation expense
b. amortization expense
c. decrease in accounts receivable
d. decrease in accounts payable

Answer: D

Which of the following items would be classified as investing activities?

Which of the following items would be classified as investing activities?

a. Proceeds from borrowing, payment of dividends, receipt of dividends.
b. Sale of goods, receipt of dividends, repurchase of firm's own stock.
c. Sale of property, purchase of securities, loans to others.
d. Proceeds from borrowing, payment of dividends.

Answer: C

Which of the following items would be classified as operating activities?

Which of the following items would be classified as operating activities?

a. Payments for inventory, payments for salaries, cash received from sale of goods.
b. Payments on loans, payments for taxes, payments for rent.
c. Proceeds from borrowing, payments of dividends, purchases of supplies.
d. Acquisitions of equipment, payment of dividends, revenue.

Answer: A

On a statement of cash flows that uses the indirect approach, calculation of cash flow from operations treats depreciation as an adjustment to reported net income because:

On a statement of cash flows that uses the indirect approach, calculation of cash flow from operations treats depreciation as an adjustment to reported net income because: 

a. depreciation is a direct source of cash
b. depreciation is an outflow of cash to a reserve account for the replacement of assets
c. depreciation reduces net income and involves an outflow of cash
d. depreciation reduces net income but does not involve an outflow of cash

Answer: D

Which of the following is not a financing activity in the statement of cash flows?

Which of the following is not a financing activity in the statement of cash flows? 

a. cash dividend
b. repurchase of common stock
c. paid interest expense
d. issuance of new debt

Answer: C