Question

In: Accounting

Which of the following information can be obtained from the Statement Of Cash Flows? (choose 2...

  1. Which of the following information can be obtained from the Statement Of Cash Flows? (choose 2 answer, for example I&II)

I. Whether the entity is collecting its receivables in a timely manner.

II. Whether the entity is generating cash from its operations.

III. Whether the entity is paying dividends to its shareholders.

2. Which of the following statements concerning Net Tangible Asset Backing (NTAB) per share are true?    (choose 2 answer, for example I&II)

  1. The NTAB per share expresses the book value of an entity’s tangible assets per ordinary share issued.
  2. The NTAB per share reflects an entity’s net cash flows from operating activities available to pay dividends and fund future investments.
  3. The NTAB per share reflects an entity’s net cash flows from operating activities available to pay dividends and fund future investments.

3.

  1. It may be difficult to analyze financial ratios because:
    1. The numbers in the Statement Of Financial Position reflect a point in time, and may not be representative of the entity’s financial position at other times of the year.
    2. Numbers in the financial statements may be too aggregated, with inadequate disclosure in the notes.
    3. The entities being compared may use different accounting policy choices and estimations.
    4. The numbers in the Statement Of Financial Position reflect a point in time, and may not be representative of the entity’s financial position at other times of the year.

4. The Quick Ratio is used to measure an entity’s:

Solutions

Expert Solution

1. The information that can be obtained from cash flow statements are whether the entity is generating cash from its operations and paying the dividend to its shareholders

2. NTAB per share expresses the book value of an entity's tangible assets per ordinary share issued and reflects an entity's net cash flows from operating activities available to pay dividends and fund future investments.

3. It is difficult to analyze the financial ratios because the numbers in the financial statements may be too aggregated, with adequate disclosure in notes and the numbers in statement of financial position reflects the point of time, and may not be representative of the entity's financial position at other times of the year.

4. The quick ratio indicates a company's capacity to pay its current liabilities without needing to sell its inventory or get additional financing. The quick ratio is considered a more conservative measure than the current ratio, which includes all current assets as coverage for current liabilities


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