32、Assume U.S. GAAP (generally accepted accounting principles) applies unless otherwise noted. An analyst gathered the following information from a company's financial statements ($ millions): Year ended 31 December | 2003 | 2004 | Sales | 320.1 | 322.8 | Net income | 26.8 | 27.2 | Cash flow from operations | 38.1 | 15.3 |
Based only on the information above, during 2004 the company most likely decreased the: A. proportion of sales made on a cash basis. B. inventory, anticipating lower demand for its products in 2005. C. proportion of interest-bearing debt relative to trade accounts payable. D. investment in long-term assets by selling undeveloped land at a substantial loss.
Correct answer = A
"Understanding the Cash Flow Statement," Thomas R. Robinson, Hennie van Greuning, Elaine Henry, and Michael A. Broihahn
2008 Modular Level I, Vol. 3, pp. 267, 280-281
Study Session 8-34-h
analyze and interpret a cash flow statement using both total currency amounts and common-size cash flow statements
Sales, net income, and net margin are relatively constant for the two years. The substantial drop in cash flow from operations could be attributed to an increase in receivables and/or inventory. A decrease in the proportion of cash sales implies an increase in the proportion of credit sales, increasing accounts receivable. An increase in accounts receivable would decrease cash flow from operations.
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发表于 2008-5-27 15:35
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