Which of the basic financial statements is best used to answer the question, "How profitable is the business

Which of the basic financial statements is best used to answer the question, "How profitable is the business?"

A) Balance sheet

B) Statement of shareholder's equity

C) Income statement

D) Accounts receivable aging schedule

Who owns the retained earnings of a public firm?

A) The IRS

B) Common stockholders

C) Bondholders

D) Preferred stockholders

Which of the following represents an attempt to measure the earnings of the firm's operations over a given time period?

A) Balance sheet

B) Cash flow statement

C) Income statement

D) None of the above

Stock that is repurchased by the issuing company is called

A) paid in capital.

B) treasury stock.

C) retained capital.

D) par value stock.

Which of the basic financial statements is best used to answer the questions "What does the company own and how is it financed?"

A) Balance sheet

B) Statement of shareholder's equity

C) Income statement

D) Cash flow statement

In a growing business, negative cash flow from investing activities is normal.

Answer:  TRUE

Reducing a firm's debt will increase its cash flow.

Answer:  FALSE 

Beginning cash balance + cash flow from operations + cash flow from investing activities + cash flow from financing activities = ending cash balance.

Answer:  TRUE

The change between a firm's beginning cash balance and ending cash balance would equal

 Which of the following represents a source of cash?

A) A decrease in accounts payable

B) A decrease in accounts receivable

C) Payment of dividends

D) An increase in inventories

The change between a firm's beginning cash balance and ending cash balance would equal

A) cash flow from operations + cash flow from investing activities + cash flow from financing activities.

B) the change in current assets minus the change in current liabilities.

C) net income plus new borrowing minus asset purchases.

D) total assets minus total liabilities minus total stockholders' equity.

Which of the following does NOT represent cash outflows to the firm?

A) Taxes

B) Interest payments

C) Dividends

D) Depreciation

The ratio of ________ to ________ is an indicator of the quality of a firm's earnings.

A) cash flow from operations, net income

B) liabilities, assets

C) dividends, interest expense

D) cash flow from operations, capital expenditures

Operating cash flow will increase with a decrease in

A) inventories.

B) current liabilities.

C) depreciation expense.

D) capital expenditures.