True or false Calculation of retained earnings is one of the factors cited by our author...

True or false

Calculation of retained earnings is one of the factors cited by our author for why NI and CF may be different.
COGS appears on the asset side of the BS.
Changes in interest expense do not affect a firm’s cash position.
the balance sheet identity indicates that total liabilities can be found by adding total assets to total equity.
If there is no change in gross fixed assets from one year to the next, then net fixed assets would have to have increased.
Accounts payable represents short-term loans extended to the corporation by suppliers.
An increase in inventory constitutes a use of cash.
Ceteris paribus, an increase in accounts receivable would reduce CFFA.
An increase in accounts receivable constitutes a use of cash while a decrease in accounts payable constitutes a source of cash.
If CFFA is 100, CFTC is 60 and dividends paid is 20, then the firm repurchased stock in the amount of 20.
If a firm’s CFFA or “free cash flow” is negative, this means that the firm will be unable to pay any cash dividends.
EBIT can be found by subtracting SGA and Depreciation from the gross profit.

Expert Solution

Calculation of retained earnings is one of the factors cited by our author for why NI and CF may be different. FALSE
COGS appears on the asset side of the BS. FALSE
Changes in interest expense do not affect a firm’s cash position. FALSE
the balance sheet identity indicates that total liabilities can be found by adding total assets to total equity. FALSE
If there is no change in gross fixed assets from one year to the next, then net fixed assets would have to have increased. FALSE
Accounts payable represents short-term loans extended to the corporation by suppliers. TRUE
An increase in inventory constitutes a use of cash. TRUE
Ceteris paribus, an increase in accounts receivable would reduce CFFA. TRUE
An increase in accounts receivable constitutes a use of cash while a decrease in accounts payable constitutes a source of cash. TRUE
If CFFA is 100, CFTC is 60 and dividends paid is 20, then the firm repurchased stock in the amount of 20. TRUE
If a firm’s CFFA or “free cash flow” is negative, this means that the firm will be unable to pay any cash dividends. TRUE
EBIT can be found by subtracting SGA and Depreciation from the gross profit. TRUE

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