Intro to Cash Flow Statements

What is the primary purpose of a cash flow statement?

• A) To report a company's revenue and expenses

• B) To show the inflow and outflow of cash in a business over a specific period

• C) To determine a company's net income

• D) To calculate the company's total assets

Which of the following is NOT a section of the cash flow statement?

• A) Operating activities

• B) Investing activities

• C) Financing activities

• D) Marketing activities

Which of the following is an example of an operating activity cash inflow?

• A) Proceeds from issuing stock

• B) Payments received from customers for goods or services

• C) Selling a building

• D) Paying dividends to shareholders

Which section of the cash flow statement includes transactions related to acquiring and selling long-term assets?

• A) Operating activities

• B) Financing activities

• C) Investing activities

• D) Income activities

What is an example of a cash outflow under financing activities?

• A) Paying employee salaries

• B) Purchasing equipment

• C) Paying dividends to shareholders

• D) Receiving interest from loans

Why is the cash flow statement considered an important tool for evaluating a company's financial health?

• A) It shows how much cash is available for reinvestment, paying dividends, or servicing debt

• B) It replaces the income statement and balance sheet

• C) It only reports cash inflows, not outflows

• D) It determines the company's tax obligations

How do lenders use the cash flow statement?

• A) To evaluate a company’s ability to repay loans

• B) To determine the company's stock price

• C) To calculate the company’s revenue

• D) To measure employee productivity

If a company has negative cash flow, what action might it take?

• A) Reduce cash inflows and increase cash outflows

• B) Ignore the issue and continue operations as usual

• C) Take steps to improve cash inflows or reduce cash outflows

• D) Stop preparing cash flow statements

What is the first step in implementing a cash flow statement?

• A) Identifying cash inflows

• B) Determining the time period to be covered

• C) Preparing the statement

• D) Taking action based on the analysis

Which of the following is an example of a cash inflow from investing activities?
A) Paying suppliers for raw materials
B) Receiving income from investments in other companies
C) Paying off a loan
D) Issuing stock to investors

• A) Paying suppliers for raw materials

• B) Receiving income from investments in other companies

• C) Paying off a loan

• D) Issuing stock to investors