What are the two most common measures of cash? A. Cash position and accounts payable B....

What are the two most common measures of cash?

A. Cash position and accounts payable
B. Cash (and cash equivalents) and cash flow from operations
C. Accounts receivable and working capital
D. Earnings per share and dividends per share

Expert Solution

Option B) Cash (and cash equivalents) and cash flow from operations.

Explanation: The analyst uses the cash flow to assess it's profitability as it represents the cash comoany is generating after all the outflows of cash . The external users want to know if the company can pay of it's short term liabilities , they use the cash flow and look for the cash (and cash equivalents ) . Cash can easily be measured by looking the Cash(and cash equivalents ) or the free cash flow .

Option A is incorrect as the accounts payable reflects the creditors of the company , as they owe the comppany no one can know the exact recovery and future transactions

Option C is incorrect as the accounts receivable are the debtors of the company , who will pay the company , the actual realisation will be later and the working capital is the current assets less current liabilties of the company.

Option D is incorrect the earnings per share is attached with the net income of the company and the dividends per share is the dividend paid by the company on every stock outstandings.

ekkarill92 answered 1 month ago

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