17. Profitability ratios include the a. times interest earned ratio. b. inventor
ID: 2601037 • Letter: 1
Question
17. Profitability ratios include the a. times interest earned ratio. b. inventory turnover ratio. c. payout ratio. d. acid-test ratio. 18. In the statement of cash flows, the activities that affect cash flows are listed in the following order: a. investing, financing, operating b. operating, financing, investing c. financing, operating, investing d. operating, investing, financing 19. A transaction involving a loss on the sale of equipment affects cash provided (used) by a. operations and investing activities b. operations and financing activities c. financing activities and investing activities d. operations, financing activities, and investing activities One major purpose of the statement of cash flows is to provide information about a. the firm's profitability b. the firm's cash receipts and payments during a period. c. the firm's resources and claims against those resources. d. changes in retained earnings. 20.Explanation / Answer
17.
Answer : c
Given above, only payout ratio is the profitablity ratio
Payout ratio = (Equity Dividend / Net Profit after Tax & Preference Dividend) * 100
Profiatbility ratio is one should have link with profit.Since payout ratio is the only one which is linked with profit, in the given above ratios,hence payout ratio is the profitablity ratio.
18.
Answer : d
Cash flow statement pattern should be like below:
Operating activities
Investing activities
Financing activities
Hence answer d is correct
19.
Answer : c
Loss on sale of euipment effect the following:
Loss on sale - sholud add back to the operating income(cash flow from operating activity)
Sale proceeds - should shown in as cash flow from investing activity
Hence Loss on sale of euipment effects both cash flow from operating and financing activity
20.
Answer : b
The major purpose of the cash flow statement is to provide information about cash receipts, cash payments, and the net change in cash resulting from the operating, investing, and financing activities of a company during the period.
Hence answer b is correct
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