HOW STUFF WORKS
QUIZZES

FOLLOW US
Cash Flow Quiz
by Staff
Before you invest a dime in the stock market, you need to learn the ins and outs of financial reports, those enigmatic quarterly statements that read like Greek translated into Klingon. Then test your knowledge with our cash flow quiz.

How many times a year are public companies required by the Securities and Exchange Commission (SEC) to file an earnings report?

  • 2
  • 3
  • 4

Which of the following financial statements is NOT typically included in quarterly reports?

  • Balance sheet
  • Corporate tax return
  • Statement of cash flows

Which corporate accounting method is used to calculate earnings and profitability?

  • Accrual accounting
  • Cash accounting
  • Profit accounting

What is the major difference between accrual and cash accounting?

  • Accrual accounting doesn't include expenses.
  • Cash accounting only counts earnings from operations.
  • Cash accounting keeps track of when cash actually changes hands, not just paper earnings.

What does "operations" refer to in corporate accounting?

  • Equipment costs
  • Income and expenses related to core business activities
  • The physical location of the company

Which of the following departments handles unpaid invoices from clients?

  • Accounts payable
  • Accounts receivable
  • Inventory

Is it possible for a company to have positive cash flow from operations but negative earnings?

  • Yes
  • No

Which of the following is NOT one of the three sections included in a statement of cash flows?

  • Cash flow from sales
  • Cash flow from investing
  • Cash flow from financing

Which of the following is NOT considered a business investment?

  • Purchase of new equipment
  • Purchase of Treasury bonds
  • Hiring of employees

If a company sells off a portion of its own business, is that considered a "cash in" or "cash out" transaction?

  • Cash in
  • Cash out
  • Neither

Which of the following is an example of financing through debt?

  • Selling stock
  • An equity stake from an "angel" investor
  • Getting a corporate loan from a bank

True or false: public companies can issue and sell bonds.

  • TRUE
  • FALSE

Which of the following is NOT an example of non-operating cash flow?

  • Cash flow from operations
  • Cash flow from investing
  • Cash flow from financing

What is the equation for calculating free cash flow?

  • Net income minus operating cash flow
  • Operating cash flow minus capital expenditures
  • Operating cash flow minus cash flow from financing

What are the three assets typically included in capital expenditures?

  • Real estate, personnel and investments (RPI)
  • Fuel, electricity and water (FEW)
  • Plant, property and equipment (PPE)

Which type of capital expenditure represents investments (repairs and replacements) in existing PPE?

  • Growth capital expenditures
  • Minimum capital expenditures
  • Maintenance capital expenditures

What is the equation for calculating operating cash flow margin?

  • Operating cash flow divided by revenue from sales
  • Gross income divided by net income
  • Assets divided by liabilities

What is the equation for calculating operating cash flow ratio?

  • Operating cash flow divided by the sum of cash flow from investing and cash flow from financing
  • Operating cash flow divided by capital expenditures
  • Operating cash flow divided by current liabilitiies

What are the two columns on a balance sheet called?

  • Profit and loss
  • Assets and liabilities
  • Credit and debit

Which is the single most important indicator of a company's financial health?

  • Statement of cash flows
  • Earning report
  • All of the above