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Question 1
The cash flow cycle:
reminds a financial manager that profits are important
illustrates that profits and cash flows are the same.
focuses on financing activities only.
describes the flow of cash through a company.
Question 2
In measuring value, the firm’s focus should be on:
earnings per share.
time value of money.
accounting profits.
cash flow.
Question 3
The three basic types of cash-related activities that every business faces are:
investing, working capital management, and financing
financing, operations, and investing.
working capital management, financing, and budgeting.
capital budgeting, investing, and cash management.
Question 4
Borrowing monies from financial institutions to fund the firm’s revenue growth is an example of which cash-related activity in the cash flow cycle?
Profitability activity
Operating activity
Investing activity
Financing activity
Question 5
Raising new capital through the sale of common equity is an example of which cash-related activity in the cash flow cycle?
Investing activity
Financing activity
Operating activity
Profitability activity
Question 6
To generate cash to invest in fixed assets, a firm can issue equity or obtain a loan from a bank. This is an example of which cash-related activity in cash flow management?
Investing activity
Profitability activity
Financing activity
Operating activity
Question 7
Cash flows and profits are synonymous, in other words, higher cash flows equal higher profits
True
False
Question 8
The ________ measure a firm’s performance over a specified period of time whereas a ________ provides a snapshot of the firm as of a specific date.
None of the choices are correct.
balance sheet and cash flow statement; income statement
income and balance sheets; cash flow statement
income and cash flow statements; balance sheet