10 Questions
What is the net capital expenditure if ABC Inc.'s depreciation expense is 90 and PP&E in the balance sheet is 810 and 730 for Year 1 and Year 2 respectively?
70
What is the retained earnings affected by?
Only net income and dividends
What is working capital calculated as?
Inventory + Accounts receivable - Accounts payable
In what scenario would working capital remain unchanged?
Buying inventory cash and selling cash
What is the purpose of calculating net capital expenditure?
To determine the changes in PP&E
What is the effect of depreciation expense on net capital expenditure?
Decreases net capital expenditure
What is the relationship between net income and retained earnings?
Net income increases retained earnings
What is the purpose of analyzing retained earnings?
To determine the financial health of the company
In what scenario would working capital increase?
Buying inventory on credit and selling on cash
What is the formula for calculating working capital?
Inventory + Accounts receivable - Accounts payable
Test your understanding of financial analysis by calculating operating cash flows using the direct and indirect methods. Learn how to prepare a statement of cash flows and identify operating, investing, and financing activities.
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