Cash Flow: Cash flow is the net effect of inflow and outflow of cash. A positive cash flow shows the surplus of the cash and a negative cash flow shows the deficit of the cash in the business. Cash Flow statement: The Cash flow statement shows the movement of cash during a particular period. The Cash flows are categorized into three categories as follows: • Cash flows from operating activities • Cash Flows from investing activities • Cash flows from financing activities (Note: Cash flows from operating activities can be prepared using direct or indirect method) Price Earnings Ratio: The price earnings ratio shows the relationship between price of the share and earnings per share. It is calculated with the help of following formula: Price Earnings Ratio= Market price per share Earnings per share Requirement-1: To discuss: The definition of Cash flow given by Fool’s School

Question

Want to see the full answer?

Answer 1

Question

Chapter 16, Problem 9BTN

To determine

Concept Introduction:

Cash Flow: Cash flow is the net effect of inflow and outflow of cash. A positive cash flow shows the surplus of the cash and a negative cash flow shows the deficit of the cash in the business.

Cash Flow statement:

The Cash flow statement shows the movement of cash during a particular period. The Cash flows are categorized into three categories as follows:

• Cash flows from operating activities

• Cash Flows from investing activities

• Cash flows from financing activities

(Note: Cash flows from operating activities can be prepared using direct or indirect method)

Price Earnings Ratio:

The price earnings ratio shows the relationship between price of the share and earnings per share. It is calculated with the help of following formula:

$Price Earnings Ratio= \frac{Market price per share}{Earnings per share}$

Requirement-1:

To discuss: The definition of Cash flow given by Fool’s School

To determine

Requirement-2:

To discuss: The importance of EBIT for analysts

To determine

Requirement-3:

To write: A report on the Fool’s ratio

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

If cash is received before services are provided, what is the journal entry?A. Debit Revenue, Credit CashB. Debit Unearned Revenue, Credit CashC. Debit Cash, Credit Unearned RevenueD. Debit Accounts Receivable, Credit Revenuecorrect

GAP Corp. is a calendar year S corporation with three shareholders. George and Anna each own 49 percent of the stock. Peter owns 2 percent of the stock. The corporation was formed on January 2, Year 1, and has been an S corporation since its inception. Using the exhibits, prepare a schedule of GAP's income, gain, loss, and deduction items for Year 2. In column B, enter the amount for federal income tax purposes. In column C, enter the amount included in GAP's Form 1120S ordinary business income (OBI) or loss. In column D, enter the amount included on GAP's Schedule K as a taxable or deductible separately stated item. Each item may have amounts entered in ordinary business income, separately stated items, or both. Enter income and gain amounts as positive numbers. Enter losses and deductions as negative numbers. If the amount is zero, enter a zero (0). A B C D 1 Income, Gain, Loss, and Deduction Items Amount for Federal Income Tax Purposes Ordinary Business Income…

If cash is received before services are provided, what is the journal entry?A. Debit Revenue, Credit CashB. Debit Unearned Revenue, Credit CashC. Debit Cash, Credit Unearned RevenueD. Debit Accounts Receivable, Credit Revenue need help