Chapter 8, Problem 8Q

explain how Value drivers are related to financial statement analysis and explain their behavior over time. Can a company reply on net income as a valid measure of cash needed to pay fixed charges? Explain you answer Explain why companies do not include principle payment requirement when calculating earnings to fixed charges ratio.

Which of the following situations required us to make an downward adjustment to net income (subtracting) when computing operating cash flows? (check all that apply) A. there was a depreciation expense B. some property was sold for a gain on the net book value C. some recognized expenses were for COGS to suppliers paid for on account D. there were some recognized revenues in accounts receivable

How does the annual rate of return differ from other methods? It has more complex calculations. It uses the amounts a company reports on its tax return. It takes into account the time value of money. It does not focus on cash flows.

Which of the following questions cannot be answered when analyzing the information presented in an income statement?   a. What were the sales for the period? b. What was the profit for the period? c. How much was spent to pay salaries during the period? d. What was the cash balance at the end of the period?

Which of the following is not added to net income as an adjustment to reconcile net income to cash from operating activities in the statement of cash flows?   A. Increase in deferred tax asset B. Increase in an accrued liability C. Loss on sale of operational asset D. Amortization of discount on bond payable

Which of the following statements is true? If a company reports net income on its income statement, it should report an increase in cash on its statement of cash flows. If a company reports a net loss on its income statement, it should report a decrease in cash on its statement of cash flows. If a company uses the accrual basis of accounting, it will improve its cash position if it reports net income for the same period. If a company uses the accrual basis of accounting, its cash balance can increase even if it reports a net loss.

Fill in the blanks:  For calculating cash flow from operating activities, provision for doubtful debts is ________________ the profit made during the year (added to/deducted from).

Describe how changes in non-cash items, such as depreciation and deferred taxes, can impact a company's cash flow statement. How can analysts adjust for these non-cash items when using the cash flow statement for financial analysis?

Using the indirect method, which of the following adjustments to convert net income to net cash provided by operating activities is correct?     Add to Net Income Deduct from Net Income Prepaid Expenses increase decrease Taxes Payable decrease increase Inventory decrease increase Accounts Receivable increase decrease