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Questions and Answers
What is the net cash flows provided by operating activities in the given cash flow statement?
What is the depreciation expense during 2022 as per the income statement?
What is the net increase in cash during the year ended December 31, 2022?
What is the formula for Cash Flow-to-Debt Ratio?
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What is the free cash flow (FCF) of the company?
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What is the cash return on assets ratio of the company?
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What is the total liabilities of the company?
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What is the average total assets of the company?
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What is the net income of the company for the year ended December 31, 2022?
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What is the cash at the end of period?
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Study Notes
Cash Flow Statement
- Consists of 3 sections: Operating activities, Investing activities, and Financing activities
Operating Activities
- Includes income statement items:
- Revenues and gains
- Expenses and losses
- Depreciation expense
- Gain/loss on sale of fixed assets
- Current assets:
- Accounts receivable
- Inventory
- Prepaid expenses
- Current liabilities:
- Accounts payable
- Expense payable
- Bond interest payable
Investing Activities
- Includes non-current assets:
- Land
- Equipment
- Buildings
- Furniture
- Machines
- Cars
- Cash flow effects:
- Purchase of assets: cash decrease
- Sale of assets: cash increase
Financing Activities
- Includes non-current liabilities:
- Bonds/long-term loans
- Equity:
- Stocks
- Retained earnings
- Cash flow effects:
- Issuance of bonds/stocks: cash increase
- Retirement of bonds/stocks: cash decrease
- Payment of cash dividends: cash decrease
Cash Flow Ratios
- Cash Flow-to-Debt Ratio: Operating Cash Flow / Total liabilities
- Free Cash Flow (FCF): Operating Cash Flow + Interest Expense - Capital Expenditure
- Cash Return on Assets Ratio: Operating Cash Flow / Average Total Assets
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Description
This quiz covers the effect of cash dividend declaration and payment on retained earnings and common stock. It involves understanding the accounting principles and journal entries for dividend payments.
