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(Analyzing the quality of firm earnings) Kabutell, Inc. had net income of $700,000, cash flow from financing activities of $60,000, depreciation expenses of $40,000, and cash flow from operating activities of $600,000. a. Calculate the quality of earnings ratio. What does this ratio tell you? b. Kabutell, Inc. reported the following in its annual reports for 2011-2013: ($ million) 2011 Cash Flow from Operations $477 Capital Expenditures (CAPEX) $461 (Click on the icon in order to copy its contents into a spreadsheet.) Calculate the average capital acquisitions ratio over the three-year period. How would you interpret these results? 2012 $403 $447 2013 $471 $455

(Analyzing the quality of firm earnings) Kabutell, Inc. had net income of $700,000, cash flow from financing activities of $60,000, depreciation expenses of $40,000, and cash flow from operating activities of $600,000. a. Calculate the quality of earnings ratio. What does this ratio tell you? b. Kabutell, Inc. reported the following in its annual reports for 2011-2013: ($ million) 2011 Cash Flow from Operations $477 Capital Expenditures (CAPEX) $461 (Click on the icon in order to copy its contents into a spreadsheet.) Calculate the average capital acquisitions ratio over the three-year period. How would you interpret these results? 2012 $403 $447 2013 $471 $455

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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(Analyzing the quality of firm earnings) Kabutell, Inc. had net income of $700,000, cash flow from financing activities of $60,000, depreciation expenses of $40,000, and cash flow from operating activities of $600,000. a. Calculate the quality of earnings ratio. What does this ratio tell you? b. Kabutell, Inc. reported the following in its annual reports for 2011-2013: ($ million) 2011 Cash Flow from Operations $477 Capital Expenditures (CAPEX) $461 (Click on the icon in order to copy its contents into a spreadsheet.) Calculate the average capital acquisitions ratio over the three-year period. How would you interpret these results? 2012 $403 $447 85.7% (Round to one decimal place.) What does this ratio tell you? (Select the best choice below.) 2013 $471 $455 O A. Kabutell's reported net income was 85.7 percent of the firm's cash flow from operations. The firm depends mainly on operating source of cash to generate its net income. OB. Kabutell's cash flow from operations was 85.7 percent of the firm's reported net income. The firm depends mainly on non-operating source of cash to generate its net income. OC. Kabutell's cash flow from operations was 85.7 percent of the firm's reported net income. The firm depends mainly on operating source of cash to generate its net income. OD. Kabutell's reported net income was 85.7 percent of the firm's cash flow from operations. The firm depends mainly on non-operating source of cash to generate its net income.
Transcribed Image Text:(Analyzing the quality of firm earnings) Kabutell, Inc. had net income of $700,000, cash flow from financing activities of $60,000, depreciation expenses of $40,000, and cash flow from operating activities of $600,000. a. Calculate the quality of earnings ratio. What does this ratio tell you? b. Kabutell, Inc. reported the following in its annual reports for 2011-2013: ($ million) 2011 Cash Flow from Operations $477 Capital Expenditures (CAPEX) $461 (Click on the icon in order to copy its contents into a spreadsheet.) Calculate the average capital acquisitions ratio over the three-year period. How would you interpret these results? 2012 $403 $447 85.7% (Round to one decimal place.) What does this ratio tell you? (Select the best choice below.) 2013 $471 $455 O A. Kabutell's reported net income was 85.7 percent of the firm's cash flow from operations. The firm depends mainly on operating source of cash to generate its net income. OB. Kabutell's cash flow from operations was 85.7 percent of the firm's reported net income. The firm depends mainly on non-operating source of cash to generate its net income. OC. Kabutell's cash flow from operations was 85.7 percent of the firm's reported net income. The firm depends mainly on operating source of cash to generate its net income. OD. Kabutell's reported net income was 85.7 percent of the firm's cash flow from operations. The firm depends mainly on non-operating source of cash to generate its net income.
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