Capital structure refers to a measure of how long it takes to convert inventory into cash. O True False
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- Describe the relationship between changes in cash and changes in noncash assets, liabilities, and stockholders equity.Which of the following would be considered a cash outflow for investing activities? a. cash paid to purchase product for inventory b. cash paid to reacquire common stock c. cash paid to repay debt d. cash paid to purchase equipmentIf a company purchases inventory with cash, does the total asset balance change ? Explain briefly.
- In the Statement of Cash Flows how is cash spent for production is computed ?a) Cost of goods sold – increases in Inventory – Increases in Trades Payableb) Cost of goods sold + increases in Inventory – Decreases in Trades Payablec) Cost of goods sold + increases in Inventory – Increases in Trades Payabled) Cost of goods sold - increases in Inventory + Decreases in Trades PayableHow can you tell by looking at a company's Statement of Cash Flows if they are using up its current inventory or purchasing inventory?The ________ is a measure of a company's ability to pay its current liabilities from cash and cash equivalents. A. cash conversion cycle B. cash ratio C. gross profit D. debt equity ratio
- Net working capital increases when inventory is purchased with cash. False or Truea company that uses the direct method to prepare the statement of cash flows, the amount of cash it uses to purchase inventory is computed as A. beginning inventory minus ending inventory, minus cost of goods sold. B. cost of goods sold plus ending inventory, plus beginning inventory. C. cost of goods sold plus ending inventory. D. cost of goods sold plus ending inventory, minus beginning inventory.Which of the following is NOT true about the working capital turnover a) Its formula is Net Sales / average working capitalb) It shows how fast the current assets are converted from cash to inventories ,to receivables and back to cash againc) Its formula is Net Sales / average current assetsd) It shows how fast the current assets are sold
- Which one of the following is a principal function of the statement of cash flows? a. To predict the ability to pay debts and dividends b. To evaluate the level of debt and leverage of a company c. To calculate the turnover of inventory d. To predict future profit growthOne of the purposes of the statement of cash flows is to ________. A to calculate inventory turnover B predict the future ability of a company to pay debts and dividends C evaluate the level of debt and leverage of a company D determine the operating income of a businessCash-basis accounting produces a measure called net operating cash flow. Describe about the measure.