We can find that companies can show profits in their income statement, but nevertheless have no cash to meet their operating and financial commitments. True or false?
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We can find that companies can show profits in their income statement, but nevertheless have no cash to meet their operating and financial commitments.
True or false?
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Solved in 2 steps
- Is it impossible for a company to report positive net income on the income statement but have negative cash flows from operating activities on the statement of cash flows? Yes or No? Thanks :)Which of the following statements is FALSE?i. Using the payback rule, you can calculate how much profits are earned over the investment period.ii. The IRR is sensitive to the timing of the cash flows.iii. Shareholders have the first claim on the cash flows of the company.1) WHY DO WEE NEED CASH FLOW STATEMENTS? EXPLAIN WHY CASH FLOW STATEMENT IS A BETTER INDICATOR OF QUALITY OF EARNINGS OF A COMPANY THAN B/S & I/S
- QUESTION 3 Undeniably, profitability is the ultimate goal of companies and readers of a company’s financial statements are very much interested in the reported profit figure. The profit figure is achieved by thepreparation of the statement of profit or loss and the statement of financial position. If the foregoing is the case, why then bother about the statement of cash flows?Undeniably, profitability is the ultimate goal of companies and readers of a company’s financial statements are very much interested in the reported profit figure. The profit figure is achieved by the preparation of the statement of profit or loss and the statement of financial position. If the foregoing is the case, why then bother about the statement of cash flows?Question A Explain how a company can report a positive net income and yet still have a negative net operating cash flow. Question B What is the m
- Is it possible that a company with a very high net income has a negative balance of cash flows from operating activities? Explain your answer. please answer in detailUndeniably, profitability is the ultimate goal of companies and readers of a company’s financialstatements are very much interested in the reported profit figure. The profit figure is achieved by thepreparation of the statement of profit or loss and the statement of financial position. If the foregoing is the4case, why then bother about the statement of cash flows?(5 marks)B. Globally, accounting standards are developed based on different methods. It is generally agreed that thenature of accounting standards depends on the systems of regulation. It has been argued that there are twomain systems of regulation.Required:Identify and explain the difference between the two systems of regulation, stating clearly which systemyou believe describes the International Financial Reporting Standards (IFRS)(5 marks)C. On 1st January 2018, Global Drilling Ltd entered into a GHS22million contract for the construction of anoffice complex at Tema. The building was completed at the end of December 2018.…1.-Accounting profit plus depreciation charges equals cash flow, when the company does not handle credits. True or false? (Class exercise)
- If a company’s current assets (such as accounts receivableand inventories) are allowed to grow out of control, whichof the following would occur?a. Cash flows from investing activities would be reduced.b. Cash flows from operating activities would be reduced.c. Cash flows from financing activities would increase.d. None of the above.The statement of cash flows is not useful for a.determining a company’s ability to pay its debts b.planning future investing and financing activities c.calculating the net worth of a company d.determining a company’s ability to pay dividendswhich of the following statements regarding free cash flow is true? a.Free cash flow measures the operating cash flow of a company after the purchase of inventory. b.Free cash flow is a valuable tool for evaluating net income. c.Free cash flow ignores productive capacity. d.None of these choices are correct.