Which is appropriate method of preparing a common size cash flow statement A. Sh

Question

Which is appropriate method of preparing a common size cash flow   statement



A. Show each   item of revenue and expense as a percentage of net revenue




B. Show each   line item on the cash flow statement as a percentage of net revenue



C. Show each   line item on the cash flow statement as a percentage of  total cash outflows










































Which of the   following is an appropriate method of computing free cash flow to the firm?


A. Add   operating cash flows to capital expenditures and deduct after tax interest   payment


B. Add   operating cash flows to after- tax interest payments and deduct capital   expenditures


C. Deduct   both after-tax interest payment and capital expenditures from operating cash   flows



















An analyst   has  calculated  a ratio using the numerator the sum of   operating cash flow, interest


and taxes   and as the denominator the amount of interest. What is this  ratio, What does it measure

and what   does it indicate?








A. This   ratio is an interest coverage ratio, measuring a company's ability to meet   its interest  obligstion

and   indicating a company's solvency







B. This   ratio is an effective tax ratio measuring the amount of a company's operating   cash flow used for

taxes and   indicating a company's efficiency in tax management.




C. This   ratio is asn operating profitability ratio, measuring the operating cash flow   generated accounting for taxes and interest and   indicating a company's liquidity.

Explanation / Answer

1)Show each line item on the cash flow statement as a percentage of net revenue

2)Deduct both after-tax interest payment and capital expenditures from operating cash flows

3) option A

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