Paint Company Following are selected data from Paint Company's financial statements.
Refer to the Paint Company data.
The cash flow from operations to capital expenditures ratio for 2012 is an indicator that Paint Company
A)has been effectively able to use operations to finance its acquisitions of productive assets.
B)has increased profits by $13,000.
C)has decreased cash,but is offset by the increase in net income
D)has net income that is more than it would have been had dividends of $30,000 been paid.

Question

Paint Company Following are selected data from Paint Company's financial statements.
 Refer to the Paint Company data.
The cash flow from operations to capital expenditures ratio for 2012 is an indicator that Paint Company
A)has been effectively able to use operations to finance its acquisitions of productive assets. 
B)has increased profits by $13,000. 
C)has decreased cash,but is offset by the increase in net income 
D)has net income that is more than it would have been had dividends of $30,000 been paid.

Quizplus · Accepted Answer

The cash flow from operations to capital expenditures ratio indicates how effectively a company is using its operations to finance the purchase of productive assets. A higher ratio indicates that the company is able to fund its capital expenditures from operational cash flows rather than relying on external financing. Therefore, a high ratio indicates that a company is managing its cash flows effectively and investing in its own growth. In this case, the ratio for 2012 is not given, but regardless, the correct answer must be A since it is the only choice that directly relates to this ratio.

Paint Company Following Are Selected Data from Paint Company's Financial