Financial Reporting And Analysis - Financial Reporting And Analysis Section 2

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17. In a common size analysis of the statement of cash flows, the items of cash flow may be presented as a percentage of:

  • Option : C
  • Explanation : In a common size analysis of the statement of cash flows, the items of cash flow may be presented as a percentage of either total cash flow or net revenue.
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18. Cash flow is most likely to be negative:

  • Option : B
  • Explanation : Cash flow is most likely negative for a growth stage company. A mature company tends to perform well and has stable cash flows. A declining profits company may not necessarily have negative cash flow.
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19. The first step in cash flow statement analysis is:

  • Option : A
  • Explanation : Identifying the major sources and uses of cash is the first step in cash flow statement analysis.
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