Where would you tell someone to find the information needed to compute the cash flow adequacy ratio?
A)The balance sheet only
B)The statement of cash flows and the notes to the statements
C)The statement of cash flows only
D)The income statement only

Question

Quizplus · Accepted Answer

The cash flow adequacy ratio requires information from the statement of cash flows to calculate cash inflows and outflows, and also from the notes to the financial statements where disclosures about non-cash items are provided. Therefore, both the statement of cash flows and notes to the financial statements are needed to compute the cash flow adequacy ratio. The balance sheet and income statement alone do not provide all the information needed for this calculation.

Where Would You Tell Someone to Find the Information Needed