What to know
Identify the rule, formula, or decision criterion before reading the answer choices. CFA Level I distractors often use the right vocabulary with the wrong condition.
Financial Statement Analysis
Analyzing Statements of Cash Flows II practice questions
Analyzing Statements of Cash Flows II is part of CFA Level I Financial Statement Analysis. Financial Statement Analysis questions require careful reading of accounting choices, ratios, cash flow classification, inventories, taxes, leases, and reporting quality. Use this page to review the controlling ideas, then work through 9 questions with answer explanations and common traps.
Review the worked explanations before moving into adaptive practice. The app version can mix this topic with due reviews and weak related concepts.
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Work each item under time pressure, then compare your reasoning with the step-by-step explanation and key takeaway.
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Financial Statement Analysis
Analyzing Statements of Cash Flows II
When evaluating the major sources and uses of cash flow, an analyst most likely expects a mature, profitable company to:
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Analyzing Statements of Cash Flows II
Sofia Russo estimates that a company's free cash flow to the firm (FCFF) is $250 million. Interest paid during the year was $40 million, the tax rate is 30%, and net borrowing was $35 million. Free cash flow to equity (FCFE) is closest to:
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Analyzing Statements of Cash Flows II
Lucas Ferreira gathers the following annual data for a manufacturer: net income $180 million, depreciation $60 million, interest expense $45 million, capital expenditures $150 million, and investment in working capital $30 million. The tax rate is 25%. Free cash flow to the firm (FCFF) is closest to:
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Analyzing Statements of Cash Flows II
A common-size statement of cash flows most often expresses each cash flow item as a percentage of:
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Analyzing Statements of Cash Flows II
CFO is 240 and includes interest paid as an operating cash flow. Interest paid is 30, the tax rate is 25%, and capital expenditures are 100. FCFF is closest to:
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Analyzing Statements of Cash Flows II
CFO is 180, capital expenditures are 70, net borrowing is 25, and dividends paid are 15. FCFE is closest to:
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Analyzing Statements of Cash Flows II
CFO is 90, average current liabilities are 150, and average current assets are 225. The operating cash flow ratio is closest to:
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Analyzing Statements of Cash Flows II
A company reports rising net income, declining CFO, and a large increase in receivables. The most appropriate interpretation is:
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Analyzing Statements of Cash Flows II
An analyst sees positive CFO generated mainly by delaying payments to suppliers while sales and margins decline. The most accurate conclusion is:
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