Equity Analysis Quiz

Question 1

What is the purpose of Cash Flow from Operations (CFO)?

Answer 1

CFO measures the amount of money the company brings in from its business activities

Question 2

What are the accounts under Reconcile Cash?

Answer 2

Depreciation & Amortization, Deferred Income Taxes, Share-based compensation, Gains/Losses on Sale of Assets, Special Changes/Restructuring, Other

Question 3

What are the accounts under Changes in Working Capital?

Answer 3

Accounts Receivable, Inventories, Accounts Payable, Prepaid Expenses, Income Taxes, Other

Question 4

What is the purpose of Cash Flows from Investing?

Answer 4

Cash flows from investing provides a view of what the company is spending its money on long-term assets and non-current assets

Question 5

What is Capital Expenditure?

Answer 5

A measure of capital investment used in valuation of stocks (capex is a deduction from cash flows).

Question 6

What are examples of cash flows from investing?

Answer 6

Purchase of fixed asset (deduction), Purchase of investment (deduction), Lending Money (deduction), Sale of fixed assets (addition), Sale of investment (addition), Collecting loans & Insurance (addition)

Question 7

What accounts are under Cash Flow from Investing?

Answer 7

Sale or Purchase of Property, Sale or Purchase of Stock Investments, Sale or Purchase of Fixed Income (debt) Securities

Question 8

What is the purpose of Cash Flow from Financing?

Answer 8

Cash Flow from financing indicates how a company funds from its operations (the net amount of funding) a company generates in a given time period (includes changes in accounts related to debt and equity)

Question 9

What are examples of Finance Activities?

Answer 9

Payment of dividends, Issuance and repayment of debt, Issuance and repayment of equity, Proceeds of exercising stock options

Question 10

How do companies raise capital?

Answer 10

By issuing debt and equity (reflected in cash flow statement)

Question 11

Depreciation & Amortization is?

Answer 11

Added to Cash Flow Operation

Question 12

Deferred Income Taxes is?

Answer 12

Added to Cash Flow Operations

Question 13

Share-based Compensation

Answer 13

Added to Cash Flow Operations

Question 14

Gains/Losses on Sale of Assets is?

Answer 14

Deducted if gain, Added if Loss

Question 15

Special Charges/Restructuring?

Answer 15

Added to Cash Flow Operations

Question 16

Other is (CFO)?

Answer 16

Added to Cash Flow from Operations

Question 17

Accounts Receivable is?

Answer 17

Deduction increases Receivables, Added decreases

Question 18

Inventories

Answer 18

Deduction increases Inventories, Addition decreases

Question 19

Accounts Payable

Answer 19

Addition increases payable, deduction

Question 20

Prepaid Expenses

Answer 20

Deduction increases PE, addition decreases

Question 21

Income Taxes

Answer 21

Addition Increases taxes, Deduction decreases

Question 22

Other (WC)

Answer 22

Added or deducted back depending on item

Question 23

Cash flow from operations

Answer 23

Sum of all Working Capital

Question 24

What is Capital Expenditure?

Answer 24

Measure of Capital investment used in the valuation of stocks

Question 25

What is the purpose of Cash Flows from Investing?

Answer 25

To provide a view of what the company is spending its money on long-term assets and non-current assets

Question 26

What are examples of Cash Flows from Investing?

Answer 26

Purchase of fixed assets (deduction), Purchase of Investment (deduction), Lending Money (deduction), Sale of Fixed Assets (Added), Sale of Investment (added), Collecting loans + Insurance (addition)

Question 27

Capital Spending (CAPEX)

Answer 27

Sum of CF from Investing

Question 28

Sale or Purchase of Property

Answer 28

Sale (Cash Inflow), Purchase (Cash Outflow)

Question 29

Sale of Purchase of Stock Investments

Answer 29

Sale (Cash Inflow), Purchase (Cash Outflow)

Question 30

Sale or Purchase of Fixed Income (debt) Securities

Answer 30

Sale (Cash Outflow), Purchase (Cash Inflow)

Question 31

What is the purpose of Cash Flow from Financing?

Answer 31

Indicates how a company funds its operations (net amount of funding a company generates in a given time period)

Question 32

What are examples of financing activities?

Answer 32

Payment of dividends, Issuance and Repayment of debt and equity, and proceeds of exercising stock options

Question 33

How do companies raise capital?

Answer 33

By issuing debt or equity

Question 34

Net Short-Term Borrowing

Answer 34

Net Redeemer = Cash Outflow, Net Issuer = Cash Inflow

Question 35

Long Term Debt Issuance

Answer 35

Cash Inflow

Question 36

Long Term Debt Redemption

Answer 36

Cash Outflow

Question 37

Purchase of Treasury Stock

Answer 37

Cash Outflow (Share repurchasing)

Question 38

Issuance of Common Stock

Answer 38

Cash Inflow

Question 39

Common Stock Dividends

Answer 39

Cash Outflow

Question 40

FCF Formula

Answer 40

Cash Flow from Operations - Capital Spending

Question 41

What are the different deployments of FCF?

Answer 41

Dividend Payments, Growth Initiatives, M&A, Share Repurchase, Deleveraging