Question 3 What can be assumed from negative financing activities presented on the Statement of Cash Flow O The company must not have any cash inflows from operations The negative financing activities would be a great concern O The company must be investing in long term assets of the company O The company must be running at a net loss as opposed to generating net income O None of the possible choices

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6. Free cash flow Accounting statements represent a company's earnings, but this is not the real cash that a company generates. Earnings data can be manipulated and can be deceiving. Thus, corporate decision makers and security analysts focus on the free cash flow that a firm generates to analyze the company's real cash position. Which of the following statements best describes free cash flow? O The amount of a firm's available cash that can be used without harming operations or the ability to produce future cash flows O The amount of a firm's available cash used to write off capital expenditures and depreciation Suppose you are the only owner of a chain of coffee shops near universities. Your current cafés are doing well, but you are interested in starting a fine-dining restaurant. You decide to use the cash generated from your existing business to enter into a new business. Your accountant provides you with the following data on your current financial performance: Financial update as…

9Which of the following does the statement of cash flows not help managers evaluate? A company’s ability to generate cash from operations How well a company manages its assets The quality of a company’s assets A company’s use of debt and equity