11) Managers of a company can use the statement of cash flows to make decisions about ________.
A) borrowing
B) buying new equipment
C) issuing corporate stock
D) all of these
12) Analysts use free cash flows to measure ________.
A) the ability of a company to raise money through the sale of stock
B) the amount of money available to pay dividends
C) the amount of cash generated by operating activities
D) a firm’s ability to operate successfully over the long-term
13) Free cash flows measures ________.
A) the ability of a company to raise money through the sale of stock
B) the amount of cash available to pay dividends
C) the amount of excess cash generated by operating activities
D) a firm’s ability to engage in long-term investment opportunities
14) Analysts use the statement of cash flows to measure ________.
A) the ability of a company to repay loans
B) the ability of a company to expand by investing in new equipment
C) the amount of excess cash generated by operating activities
D) all of these
15) Analysts use the statement of cash flows to measure ________.
A) the profitability of a company
B) the amount of the company’s obligations
C) the amount of excess cash generated by operating activities
D) all of these
16) During the year, Team Shirts, Inc. had net cash from operating activities of $50,000; it paid $10,000 in dividends; and it purchased long-term assets for $30,000. Free cash flow for the year was ________.
A) $90,000
B) $40,000
C) $20,000
D) $10,000
17) During the year, Team Shirts, Inc. had net cash from operating activities of $50,000; it paid $20,000 in dividends; it purchased equipment for $30,000; and it purchased office supplies for $10,000. Free cash flow for the year was ________.
A) $0
B) $(10,000)
C) $10,000
D) $100,000
18) Williston Skateboards had net cash from operating activities of $63,780. During the month, the firm paid no dividends and $575 in interest. Williston Skateboards also spent $4,925 on office equipment. Free cash flow for the month was ________.
A) $63,780
B) $63,205
C) $58,280
D) $58,855
19) Williston Skateboards had net cash from operating activities of $33,780. During the month, the firm paid no dividends and $435 in interest. Williston Skateboards also spent $12,740 on office equipment. Free cash flow for the month was ________.
A) $20,505
B) $33,780
C) $33,345
D) $21,040
20) In the long run, it is most important that a company has positive cash flow from ________.
A) operating activities
B) investing activities
C) financing activities
D) none of these; it is better to have negative cash flows in the long run