QUESTION: 1473

Which of the following about Free Cash Flows (FCFs) is TRUE?

FCF = Cash from operations - outlays for replacement of used capacity.
FCF = Cash from operations - outlays for maintenance of current capacity - dividends declared.
FCF = Cash from operations - outlays for dividend payments and scheduled debt retirement
FCF = Net Income + Non-cash expenses.

Answer(s): B

Explanation:

FCF = Cash flows from operations - Net capital expenditures required to maintain productive capacity - Dividends on preferred stock and common stock (assuming a payout policy).

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The opinion paragraph of an independent auditor's report begins, "In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position..." This language states ________.

an unqualified opinion
a disclaimer of opinion
none of these answers
a qualified opinion
an "except for" opinion

Answer(s): A

Explanation:

These references do not constitute a disclaimer or a qualified or adverse opinion, therefore, the language refers to an unqualified opinion.

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QUESTION: 1475

A firm has a net income of 150, an increase in accounts receivables of 30, depreciation of 55 and a decrease in accounts payable of 25. Its operating cash flow is ________.

Answer(s): B

Explanation:

operating cash flow = net income + noncash expenses - non-cash revenues = 150 + 55 - 30 - 25 = 150.

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QUESTION: 1476

Stock dividends and stock splits differ in that

stock splits are paid in additional shares of common stock, whereas a stock dividend results in replacement of all outstanding shares with a new issue of shares.
a stock dividend results in a decline in the par value per share.
in a stock split a larger number of new shares replaces the outstanding shares.
stock splits involve a bookkeeping transfer from retained earnings to the capital stock account.
none of these answers.

Answer(s): C

Explanation:

A stock split does not involve any accounting entries. Instead, a larger number of new shares are issued to replace and retire all outstanding shares.

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Free CFA-Level-I Exam Braindumps (page: 369)

QUESTION: 1473

Explanation:

QUESTION: 1474

Explanation:

QUESTION: 1475

Explanation:

QUESTION: 1476

Explanation: