A mature and stable company will likely have positive investing cash flows. O Thue O False
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A: Yes. Negative free cash flow is not necessarily bad. Most rapidly growing companies have negative…
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A: External financing is any kind of business funding you acquire from sources outside the company.…
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A: 1. false as the capital budgeting evaluates risk and timing of future cashflow considering the size…
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- A. What is the liquidity position of the company? Support your answer with relevantratios B. What is the Cash Conversion Cycle for the company? Assume a 360-day year. C. Explain what is meant when a business activity has high operating gearing, andwhat are the implications for a business with high operating gearing?A company that has positive cash flows from its concern. O financing activities O stockholders' equity operating activities O investing activities would most likely be able to generate enough cash to continue as a going.Summit Manufacturing’s most recent statements of cash flows indicate that the firm has paid large dividends to its stockholders in each of the past three years. Upon noting this information, A : potential investors would be more likely to invest in Summit, but potential lenders may be less likely to grant the company a loan. B : potential investors would be less likely to invest in Summit, but potential lenders may be more likely to grant the company a loan. C : potential investors would be less likely to invest in Summit, and potential lenders may be less likely to grant the company a loan. D : potential investors would be more likely to invest in Summit, and potential lenders may be more likely to grant the company a loan.
- Why can it be misleading to use a firm's working capital to discuss cash flow without further qualification? "Cash flow methodology should distinguish between a new capital-intensive business and a more mature operation." Discuss. The number of companies acquired only two or three years from startup has increased dramatically in the last few years. What are the root causes of these early exits? How much is a customer worth? How much does it cost to acquire an additional one? This is the focus of Peters' plan for a successful early exit when the business model is yet to show any profit. However, investors will also have to consider other factors. Which factors are not covered in Peters' analysis?Your Statement of Cash Flows shows a negative cash flow from investing activities (primarily from a significant investment in equipment this year) and a positive cash flow from financing activities (primarily due to both issuing new common stock and taking out a note payable to fund your equipment purchase). Your CEO has asked you to give one potential positive and one potential negative explanation for the investing and financing cash flows. You should have 4 statements total (Investing - 1 positive explanation, 1 negative explanation; Financing - 1 positive, 1 negative). E.g. "The negative cash flow from investing could be a positive thing because the equipment we bought has a Buffalo Bills logo, which will bring in more customers!"Last year, National Co. reported negative net cash flow and negative free cash flow. However, its cash on the balance sheet increased. Which of the following could explain these changes in its cash position? a. The company had a sharp increase in its depreciation and amortization expenses. b. The company had a sharp increase in its inventories. c. The company issued new common stock. d. None of the choices
- in which stage of the industry cycle is it most difficult for the analysist to assess industryprospects and identify the leading companies?1. Pioneer development2. Rapid acceleration growth3. Mature growth4. Deceleration growth which one of the following is not a use of cash in a cash flow statement?1. Decrease in any liability2. Increase in any liability3. Operating loss (-EBIT)4. Cash dividends paid which one of the following is not a source of cash as entered in a cash flow statement?1. Decrease in any assets2. Increase in any liability3. Increase in any assets4. EBIT-earnings before interest and taxThe management of the Keribels Company wishes to apply the Miller-Orr model to manage its cash investments. They have determined that the cost of either investing in or selling marketable securities is P 100. By looking at the Keribels Company’s past cash needs, they have determined that the variance of daily cash flow is P 75,000. Keribels Company’s opportunity cost of cash per day is 0.05%. Based on their experience the cash balance should not fall below P 50,000. WHAT IS THE LOWER LIMIT? (Use a number, no decimal value, no currency, no space, no commas) *The management of the Keribels Company wishes to apply the Miller-Orr model to manage its cash investments. They have determined that the cost of either investing in or selling marketable securities is P 100. By looking at the Keribels Company’s past cash needs, they have determined that the variance of daily cash flow is P 75,000. Keribels Company’s opportunity cost of cash per day is 0.05%. Based on their experience the cash balance should not fall below P 50,000. WHAT IS THE UPPER LIMIT?
- If during the year a company has high cash flows from its operations, does this meanthat cash on its balance sheet will be higher at the end of the year than it was at thebeginning of the year? Explain.As a firm grows, it must support increases in revenue with new investments in assets. The self-supporting, or sustainable, growth model helps a firm assess how rapidly it can grow, while maintaining a balance between its cash outflows (increases in noncash assets) and inflows (funds resulting from increases in liabilities or equity). Consider the following case of Cold Duck Manufacturing Inc.: Cold Duck Manufacturing Inc. has no debt in its capital structure and has $300,000,000 in assets. Its sales revenues last year were $210,000,000 with a net income of $7,000,000. The company distributed $155,000 as dividends to its shareholders last year. Given the information above, what is Cold Duck Manufacturing Inc.’s sustainable growth rate? 0.05% 2.33% 3.91% 0.51% Which of the following are assumptions of the sustainable (self-supporting) growth model? Check all that apply. The firm pays out a constant proportion of its earnings as dividends.…When the company is working at full capacity, the assets in the AFN equation is the total assets True False Considering each action independently and holding other things constant, which of the following actions would reduce a firm’s need for additional capital? a. An increase in the dividend payout ratio. b. A decrease in the days sales outstanding. c. An increase in expected sales growth. d. A decrease in the profit margin.
