Cash outflows for payment of cash dividends is an example of:
Answer(s): C
Providing stockholders with a return on their investment in the form of a cash dividend is a financing activity.
Basic earnings per share is calculated as:
Answer(s): B
The basis EPS formula aims to derive earnings per share of common stock for the amount of the year that the common shares were outstanding. It is for this reason that preferred dividends are not included and the weighted average number of common shares outstanding are used in the denominator.
Which of the following about Free Cash Flows (FCFs) is TRUE?
FCF = Cash flows from operations - Net capital expenditures required to maintain productive capacity - Dividends on preferred stock and common stock (assuming a payout policy).
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 ________.
Answer(s): A
These references do not constitute a disclaimer or a qualified or adverse opinion, therefore, the language refers to an unqualified opinion.
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 ________.
operating cash flow = net income + noncash expenses - non-cash revenues = 150 + 55 - 30 - 25 = 150.
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