Limitations of free cash flow


Develop brief answers to each of the below questions:

1. Why does a decrease in receivable turnover create the need for cash from operating activities?

2. Why would ratios that include one balance sheet account and one income statement account, such as receivable turnover or return on assets, be questionable if they come from quarterly or other interim financial reports?

3. Can you suggest a limitation of free cash flow in comparing one company to another?

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Financial Accounting: Limitations of free cash flow
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