Explain the meaning of free operating cash flow
What will be an ideal response?
Free operating cash flow is operating cash flow minus capital expenditures. If a company has undergone a change in capital expenditures for the period being considered,the free operating cash flow will give an improved picture of the cash generated by a firm's operations.
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If an organization processes large numbers of transactions that use common data records, what type of system would work best (all else being equal)?
Suppose you are comparing two firms in the steel industry. One firm is large and the other is small. Which type of numbers would be most meaningful for statement analysis?
a. Absolute numbers would be most meaningful for both the large and small firm. b. Absolute numbers would be most meaningful in the large firm; relative numbers would be most meaningful in the small firm. c. Relative numbers would be most meaningful for the large firm; absolute numbers would be most meaningful for the small firm. d. Relative numbers would be most meaningful for both the large and small firm, especially for interfirm comparisons. e. It is not meaningful to compare a large firm with a small firm.
Costs such as salary of supervisors and other support personnel, which are accounted for as overhead costs, are called
A) period labor costs. B) sales assistance costs. C) indirect labor costs. D) prime labor costs.
Overstating inventory in order to overstate net income:
a. is a relatively easy fraud to maintain without getting caught. b. requires that, in subsequent periods, inventory must be understated by larger and larger amounts to maintain the fraud. c. will impact cost of goods sold in the current year and the subsequent year. d. All of the choices are true regarding overstating inventory.