I cut the wrong answers for your help. 9. The operating-cash-flow-to-current-lia

Question

I cut the wrong answers for your help.

9. The operating-cash-flow-to-current-liabilities ratio is computed by dividing a firm's a net cash flow from operating activities by:

A. Total liabilities at the middle of the period

B. Current liabilities at the beginning of the period

D. Average current liabilities for the period

10. Guinea C. Company is preparing trend percentages for its service fees earned for the period 2013 through 2017. The base year is 2013. The 2016 trend percentage is computed as:

A. 2015 service fees earned divided by 2016 service fees earned

B. 2016 service fees earned divided by 2012 service fees earned

C. 2016 service fees earned divided by 2013 service fees earned

Explanation / Answer

9). The operating-cash-flow-to-current-liabilities ratio = Cash Flow from Operations / Average Current Liabilities
Hence the answer is D). Average Current liabilities for the period.
Because the cash flows generated cannot be said that only opening or ending current liabilities are responsible. Hence average current liabilities are used.

10). Trend Percentage to be calculated as:-
2016 service fees earned / 2013 service fees earned.
Because the trend percentage to be calculated is for 2016 year hence the numerator is for the year 2016 and base year is 2013, hence the denominator is for the year 2013.

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