10 Questions
It pertains to cash flows associated with the purchase and sale of both fixed assets and equity investments in other firms.
INVESTING
It refers to the unequal amounts of inflows and outflows over the period.
MIXED STREAM
It is an annuity with an infinite life, providing continual annual cash flow.
PERPETUITY
It pertains to cash flows directly related to the sale and production of the firm's products and services.
OPERATING
It is the amount of money on which interest is paid.
PRINCIPAL
It pertains to cash flows that result from debt and equity financing transactions.
FINANCING
It is the point at which to reorder inventory, expressed as days of lead time x daily usage.
REORDER
It refers to current assets, which represent the portion of investment that circulates from one form to another in the ordinary conduct of business
WORKING CAPITAL
It is the relationship between revenues and costs generated by using the firm’s assets.
PROFITABILITY
It involves the preparation of pro form a statements.
PROFIT PLANNING
Study Notes
Cash Flow Classification
- Investing cash flows: related to the purchase and sale of fixed assets and equity investments in other firms
- Operating cash flows: unequal amounts of inflows and outflows over a period
- Perpetuity: an annuity with an infinite life, providing continual annual cash flow
Cash Flow Categories
- Operating cash flows: directly related to the sale and production of a firm's products and services
- Financing cash flows: result from debt and equity financing transactions
Financial Concepts
- Principal: the amount of money on which interest is paid
- Reorder point: the point at which to reorder inventory, expressed as days of lead time x daily usage
- Current assets: represent the portion of investment that circulates from one form to another in the ordinary conduct of business
Financial Analysis
- Return on investment (ROI): the relationship between revenues and costs generated by using a firm's assets
- Pro forma statements: involve preparation of statements to analyze a firm's financial performance
Test your knowledge on cash flows resulting from debt and equity financing transactions, including the impact on financial statements and business decisions.
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