From the viewpoint of shareholders or potential investors, which of the following cash flow measurements would be of least importance?
A) The dollar amount of net cash from operating activities for the current year.
B) The trend in net cash from operating activities from year to year.
C) The corporation's free cash flow for the current year.
D) The dollar amount of overall increase or decrease in cash for the current year.

Question

Quizplus · Accepted Answer

The dollar amount of overall increase or decrease in cash for the current year may not provide sufficient information for shareholders or potential investors as it does not distinguish the source of cash inflows or outflows. It could result from various factors such as borrowing, investment activities, or changes in financing arrangements, which may not be indicative of the company's performance or future potential. On the other hand, the other cash flow measurements (A, B, and C) are more relevant and informative as they reflect the company's operating efficiency, sustainability, and capacity to generate free cash flow after accounting for capital expenditures.

From the Viewpoint of Shareholders or Potential Investors, Which of the Following