A statement of cash flows allows a financial analyst to determine:
A) whether a cash dividend is affordable.
B) how increase in asset accounts have been financed.
C) whether long-term assets are being financed with long-term or short-term financing.
D) all of the choices are correct.

Question

Quizplus · Accepted Answer

A statement of cash flows provides information about the sources and uses of cash during a specific period, which allows a financial analyst to determine all of the options listed in the choices. The statement helps to evaluate a company's ability to pay dividends, to see how increases in assets are being financed, and whether a company is relying on long-term or short-term financing to fund long-term assets. Therefore, all options are correct.

A Statement of Cash Flows Allows a Financial Analyst to Determine