Which of the following is a stronger indicator of cash flow flexibility?A. cash flow from operating activitiesB. cash flow to sales ratioC. free cash flowD. all three indicate comparable degrees of flexibility

Which of the following is a stronger indicator of cash flow flexibility?A. cash flow from operating activitiesB. cash flow to sales ratioC. free cash flowD. all three indicate comparable degrees of flexibility

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter16: Statement Of Cash Flows

Section: Chapter Questions

Problem 15MC: Which of the following is a stronger indicator of cash flow flexibility? A. cash flow from operating...

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Which of the following is a stronger indicator of cash flow flexibility?
A. cash flow from operating activities
B. cash flow to sales ratio
C. free cash flow
D. all three indicate comparable degrees of flexibility

Definition Definition Cash that is left over after a company has paid for its operating and capital expenses. Unlike net income or earnings, free cash flow excludes non-cash expenses of the income statement and includes the expenditures on equipment and assets. Free cash flow also helps potential shareholders to evaluate how quickly the company can pay interest and dividends.

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