Describe what operating leverage is, and the difference between
the degree of pre-tax cash flow operating leverage and the degree
of accounting operating leverage (use formulas in your
explanations). Under what conditions would a corporate
decision-maker be more interested in the accounting metric?
Describe what operating leverage is, and the difference between
the degree of pre-tax cash flow operating leverage and the degree
of accounting operating leverage (use formulas in your
explanations). Under what conditions would a corporate
decision-maker be more interested in the accounting metric?
(maximum length guide: about 150 words)
Identify the six issues regarding ratios (hint cautions)
Explain the difference between cash flow from operating
activities, investment activities, and financing activities.
Identify the variables used in calculating both the present and
future value of a single dollar amount and an annuity.
What is the difference between Cash Flow and
Profit?
A. Cash Flow is the cash collected and paid in a company’s core
operations. Profit tracks the revenue from customers and the costs
of doing business.
B. Profit tracks the cash collected and paid in a company’s core
operations. That’s why it’s called the bottom line. Cash Flow is
the change in cash and cash equivalents from one year to the
next.
C. Cash flow is found on the balance sheet...
Describe and explain three different cash flows:
operating cash flow, investment cash flow, and cash flow from
financing activities. What is the relative importance of each, and
what factors impact your assessment? Does it vary by industry or
business maturity? Imagine that you were structuring a business
from the ground up--what percentage of cash flow would you target
for each of these three types?