17 . B is correct. Share repurchases reduce the company's cash (an asset). Shareholders' equity is reduced because there are fewer shares outstanding and treasury stock is an offset to owners' equity. 18 . B is correct. Common-size analysis (as presented in the reading) provides information about composition of the balance sheet and changes over time. As a result, it can provide information about an increase or decrease in a company's financial leverage.

19 . A is correct. The current ratio provides a comparison of assets that can be turned into cash relatively quickly and liabilities that must be paid within one year. The other ratios are more suited to longer-term concerns.

20 . A is correct. The cash ratio determines how much of a company's near-term obligations can be settled with existing amounts of cash and marketable securities.

21 . C is correct. The debt-to-equity ratio, a solvency ratio. is an indicator of financial risk.

22 . B is correct. The quick ratio ([Cash+ Marketable securities + Receivables] ÷Current liabilities) is l.44 ([= 1,884 + 486 + 2,546] ÷ 3,416}. Given the placement of other financial assets between cash and receivables, it is reasonable to assume these are highly liquid and are probably marketable securities.

23 . C is correct. The financial leverage ratio (Total assets ÷ Total equity) is l.58 =(13,374 ÷ 8,491).

Reading 27 understanding Cash Flow Statements 试题整理 PRACTICE PROBLEMS

1 . The three major classifications of activities in a cash flow statement are: A . inflows, outflows ,and net flows. B . operating, investing, and financing. C . revenues, expenses, and net income.

2 .The sale of a building for cash would be classified as what type of activity on the cash flow statement? A . Operating. B . Investing. C . Financing.

3 . Which of the following is an example of a financing activity on the cash flow statement under U.S. GAAP?

A . Payment of interest. B . Receipt of dividends. C . Payment of dividends.

4 . A conversion of a face value $l million convertible bond for $l million of common stock would most likely be:

A . reported as a $1 million investing cash inflow and outflow. B . reported as a $1 million financing cash outflow and inflow. C . reported as supplementary information to the cash flow statement. 5 . Interest paid is classified as an operating cash flow under:

A . U.S. GAAP but may be classified as either operating or investing cash flows under IFRS. B . IFRS but may be classified as either operating or investing cash flows under U.S. GAAP.

C . U.S. GAAP but may be classified as either operating or financing cash flows under IFRS. 6 . Cash flows from taxes on income must be separately disclosed under:

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A . IFRS only. B . U.S. GAAP only. C . both IFRS and U.S GAAP. 7 . Which of the following components of the cash flow statement may be prepared under the indirect method under both LFRS and U.S. GAAP? A . Operating. B . Investing. C . Financing. 8 . Which of the following is most likely to appear in the operating section of a cash flow statement under the indirect method? A . Net income. B . Cash paid to suppliers. C . Cash received from customers. 9 . Red Road Company, a consulting company, reported total revenues of $100 million, total expenses of $80 million. and net income of $20 million in the most recent year. If accounts receivable increased by $10 million how much cash did the company receive from customers? A . $90 million. B . $100 million. C . $ll0 million. 10 . Green Glory Corp., a garden supply wholesaler, reported cost of goods sold for the year of $80 million. Total assets increased by $55 million, including an increase of $5 million in inventory. Total liabilities increased by $45 million. including an increase of $2 million in accounts payable. The cash paid by the company to its suppliers is most likely closest to: A . $73 million. B . $77 million. C . $83 million. 11 . Purple Fleur S.A., a retailer of floral products, reported cost of goods sold for the year of $75 million. Total assets increased by S55 million, but inventory declined by $6 million. Total liabilities increased by $45 million. and accounts payable increased by $2 million. The cash paid by the company to its suppliers is most likely closest to: A . $67 million. B . $79 million. C . $83 million. 12 . White Flag, a women's clothing manufacturer, reported salaries expense of $20 million .The beginning balance of salaries payable was $3 million, and the ending balance of salaries payable was $1 million. How much cash did the company pay in salaries? A . $18 million. B . $21 million. C . $22 million. 13 . An analyst gathered the following information from a company's 2010 financial statements (in $ millions)

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Based only on the information above, the company's 2010 statement of cash flows in the direct format would include amounts (in $ millions) for cash received from customers and cash paid to suppliers, respectively, that are closest to: cash received from

14 . Golden Cumulus Corp., a commodities trading company, reported interest expense of $19 million and taxes of $6 million. Interest payable increased by $3 million, and taxes payable decreased by $4 million over the period. How much cash did the company pay for interest and taxes? A . $22 million for interest and $10 million for taxes. B . $16 million for interest and $2 million for taxes. C . $16 million for interest and $10 million for taxes.

15 . An analyst gathered the following information from a company's 2010 financial statements (in $ millions) :

In 2010, the company declared and paid cash dividends of $10 million and recorded depreciation expense in the amount of $25 million. The company considers dividends paid a financing activity. The company's 2010 cash flow from operations (in $ millions) was closest to A . 25. B . 45. C . 75. 16 . Silverago Incorporated, an international metals company, reported a loss on the sale of equipment of $2 million in 2010. In addition, the company's income statement shows depreciation expense of $8 million and the cash flow statement shows capital expenditure of $10 million , all of which was for the purchase of new equipment. Using the following information from the comparative balance sheets. how much cash did the company receive from the equipment sale?

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A . $l million. B . $2 million. C . $3 million.

17 . Jaderong Plinkett Stores reported net income of $25 million. The company has no outstanding debt. Using the following information from the comparative balance sheets (in millions), what should the company report in the financing section of the statement of cash flows in 2010?

A . Issuance of common stock of $42 million; dividends paid of $10 million. B . Issuance of common stock of $38 million; dividends paid of $l0 million. C . Issuance of common stock of $42 million; dividends paid of $40 million.

18 . Based on the following information for Star Inc., what are the total net adjustments that the company would make to net income in order to derive operating cash flow?

A . Add $2 million. B . Add $6 million. C . Subtract $6 million.

19 . The first step in cash flow statement analysis should be to: A . evaluate consistency of cash flows. B . determine operating cash flow drivers. C . identify the major sources and uses of cash.

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