Long-term assets are $5,000, current liabilities are $700, and long-term liabilities are $3,000 and the operating cash flow ratio is 1.1, then the company's cash flows from operating activities will be
A)$ 700.
B)$ 770.
C)$3,300.
D)$5,500.

Question

Quizplus · Accepted Answer

First, we need to calculate the operating cash flow using the formula:

Operating cash flow = (Current assets - Current liabilities) / Operating expenses

We are not given the current assets or operating expenses, so we will use the operating cash flow ratio to estimate the operating cash flow.

Operating cash flow ratio = Operating cash flow / Current liabilities

1.1 = Operating cash flow / 700

Operating cash flow = 1.1 * 700

Operating cash flow = 770

Therefore, the company's cash flows from operating activities will be $770.

Long-Term Assets Are $5,000, Current Liabilities Are $700, and Long-Term