| A | B |
|---|
| Cash Debt Coverage Ratio | A cash-basis measure of solvency; computed as net cash provided by operating activities divided by average total liabilities. (p. 749) |
| Cash Return on Sales Ratio | A cash-basis measure of profitability; computed as net cash provided by operating activities divided by net sales. Also called cash flow margin. (p. 749) |
| Current Cash Debt Coverage Ratio | A cash-basis measure of liquidity; computed as net cash provided by operating activities divided by average current liabilities. (p. 748) |
| Direct Method | A method of determining the net cash provided by operating activities by adjusting each item in the income statement from the accrual basis to the cash basis. (p. 736) |
| Financing Activities | Cash flow activities that include (a) obtaining cash from issuing debt and repaying the amount borrowed and (b) obtaining cash from stockholders and providing them with a return on their investment. (p. 717) |
| Indirect Method | A method of preparing a statement of cash flows in which net income is adjusted for items that did not affect cash, to determine net cash provided by operating activities. (p. 724) |
| Investing Activities | Cash flow activities that include (a) acquiring and disposing of investments and productive long-lived assets, and (b) lending money and collecting on those loans. (p. 717) |
| Operating Activities | Cash flow activities that include the cash effects of transactions that create revenue and expenses and thus enter into the determination of net income. (p. 717) |
| Statement of Cash Flows | A financial statement that provides information about the cash receipts and cash payments of an entity during a period, classified as operating, investing, and financing activities, in a format that reconciles the beginning and ending cash balances. (p. 717) |
