When using EBITDA instead of net income to measure a firm’s operational characteristics, why are depreciation and amortization expense added back?   Depreciation and amortization expense represent expenses from an accounting standpoint but don’t represent actual cash outflows. Depreciation and amortization expense represent an insignificant cash outflow for a business. Depreciation and amortization expense are superficial.

Q: Why do DCMs use dividends and not earnings in their formulas? a. Because earnings are not equal to…

A: DCMs seek to evaluate the fair value of a company regardless of current market conditions, taking…

Q: How to incease profitability in a service company if Operating cash does not cover debt?

A: operating cash flows -  cash flows from the operations of the business are known as operating cash…

Q: Which of the following questions is not addressed by the statement of cash flows? Multiple Choice O…

A: Cash Flow Statement: A cash flow statement is a kind of financial statement that offers aggregate…

Q: Which of the following statements is incorrect?      A. Dividend payments can be influenced by cash…

A: Dividends are the amount of profits distributed to the shareholders of the company.

Q: ‘The measurement of cash flow is straightforward and objective. Profit on the other hand is complex…

A: The assertion catches both the current working outcomes and the going with changes yet to be…

Q: If a business decides to switch from the indirect method to the direct method for reporting cash…

A: Cash Flows Statement - Cash Flow Statement shows the movement of Cash in the company for the…

Q: Which of the following is not correct about the negative cash flows? O a. You cannot cover your…

A: Cash flow statement: It is a statement which reports the cash inflows and outflows of a business…

Q: Liquidity is the ability of a company to meet its needs for cash in the short and long term. True O…

A: Ratio analysis means where different ratio of various years of years companies has been compared and…

Q: True and False questions - Indicate True or False 1. A negative net present value is acceptable.…

A: 1) Net present value is present value of cash inflow less present value of cash outflow. When…

Q: ain reason for the failure of óf anies is the occurrence of a ty resulting from the decrea s for…

A: A liquidity crisis is frequently created by a mismatch in maturity between assets and obligations,…

Q: hich of the following is NOT true about the working capital turnover a) Its formula is Net Sales /…

A: Working capital = current assets - current liabilities

Q: Using the indirect method for preparing the statement of cash flows, which of the following would…

A: The objective of the first part of the question is to identify which item would not be included as…

Q: explain how Value drivers are related to financial statement analysis and explain their behavior…

A: 1) A valuation driver refers to the factors that will the help the business to increase its value in…

Q: Identify all items that cannot be assessed using the balance sheet? 1. Cash flow generating power of…

A: Solution Analysis Statement 1 can be assessed as balance sheet provides the cost and net value of…

Q: The Statement of Cash Flows is prepared instead of the Retained Earnings Statement. Group of answer…

A: Retained Earnings - Retained Earnings is the statement that shows the profit earned by the company…

Q: Do expenses imply "sacrifices" required in the effort the business makes to generate revenue?…

A: The objective of the question is to understand if expenses in a business context can be considered…

Q: Which of the following statements is not correct   O a. Cash balance does not have an opportunity…

A: 1.A firm may hold surplus cash balance to pay dividend to its shareholders. It is correct…

Q: It has been said that operating managers focus primarily on the income statement while financial…

A: Income statement, Balance sheet and cash flows statement are very important financial statements…

Q: /hich of the following statements is false? O a. Assets must always equal the sum of liabilities and…

A: Assets can be classified as current assets or long term assets and represented in the balance sheet.

Q: What are some of the accounting applications that incorporate the time value of money into…

A:

Q: Is it impossible for a company to report positive net income on the income statement but have…

A: Cash flow from the operating activities refers to the inflow and outflow of the cash in the business…

Q: How can a Company Show Positive Net Income but go Bankrupt? What does Working Capital Mean? Why do…

A: Kindly find the answers to you question below :

Q: If cash is received from a customer in the current period, but the related performance obligation is…

A: Accounting principles are general guidelines that are used by the accountant in preparing the…

Q: If a company failed to record an accrued income, what would be the effects?

A: Accrued income is that income which is being earned by the business for the particular period of…

Q: some examples for these conditions؟ Purchase and sale of assets Increase or decrease in cash & cash…

A: The accounting equation justifies the rules and nature of accounting means the double entry…

Q: 1. What is the general trend of the company’s current assets? Did you observe any account with…

A: "Since you posted a question with multiple sub-parts, we will solve the first three sub-parts for…

Q: Is it possible for a company to have significant net income in the same time period that net cash…

A: Yes! It is possible because net income is based on accrual concept i.e. income is recognized as and…

Q: An increase in net working capital causes a. A cash inflow b. A cash outflow c. Does not affect…

A: Working Capital is shown the difference between the current assets and current liabilities of the…

Q: Cash flows from selling machinery would be classififed as investing activities. True False

A: Investing activities is an important section in cash flow statement which shows all cash inflows and…

Q: If a company’s current assets (such as accounts receivableand inventories) are allowed to grow out…

A: Statement of cash flows is a financial statement, which is prepared to identify and analyze the…

Q: When using EBITDA instead of net income to measure a firm's operational characteristics, why are…

A: EBITDA means earnings before interest, tax, depreciation and amortisation. It means all these have…

Q: How does the annual rate of return differ from other methods? It has more complex calculations. It…

A: The annual rate of return (ARR) is a financial metric used to evaluate the profitability of an…

Q: The book value is derived by subtracting the total liabilities of a company from its total assets.…

A: 1. Book Value is the difference between a company's total assets and its total liabilities.…

Q: Which of the following is correct about "Cost", "Expense", and "Loss" concepts? Select one: a.…

A: Income statement is one of the significant financial statements and the two components of this…

Q: You hear a saying "In order to find out how much cash a company is generating, you have to look at…

A: Net profit of the company means how much profits or income has been earned in a particular period of…

Q: What would cause or Why would "restructuring charges" be added back into earnings in a Statement of…

A: In a cash flow statement, in the indirect method of cash flow statement, Net income is taken as…

Q: Since EBIT is not necessarily indicative of cash flow, many financial analysts adjust the…

A: The time's interest earned ratio: It is a financial ratio that helps in analyzing the capability of…

Q: What is the impact on profit for the year if income overstated? a. no effect b. profit will be…

A: Lets understand the basics. If there is error in recording the transaction then adjustment needs to…

Q: The company has shown an ability to generate a positive cash flow from operations, while reporting…

A: The cash flow statement represents the cash inflow ad cash outflow due to the operating, financing…

Q: Is it possible that a company with a very high net income has a negative balance of cash flows from…

A: Cash Flow Statement - The Cash Flow Statement includes the inflow and outflow of cash in the…

Q: 7.- The accounting profit of a company always represents available cash flows. true or false?…

A: It is pertinent to note that under the accrual basis of accounting transactions are recorded in…

Q: Historical cost is based on actual, not merely possible, transactions. It is the acquisition price…

A: What is historical cost ? A Historical cost is a proportion of significant worth utilized in…

Cash Flow Statement Analysis

A company's cash flow is the movement of its cash inflows and cash outflows. A cash flow statement is prepared to determine changes in an organization's cash position. A cash flow statement shows how much money was generated and spent on the business during the fiscal year. The cash flow analysis is a method of analyzing an organization's investing, financing, and operating activities. A cash flow statement reveals an organization's liquidity and solvency, as well as its ability to change cash flows in the future. It eliminates the other effects of accounting methods by improving the comparability of different organizations' operational performance.