Back to lesson
1. What can operating managers do to increase free cash flow?
Since free cash flow refers to the interest rate on debt, there is nothing operating managers can do about it.
Improve Net Income since Free Cash Flow changes in proportion with net income.
Improve operational efficiency and productivity to increase cash from operating activities.
2. What financial measure indicates whether the asset base has been created through debt or through equity?
Return on Total Assets.
Debt to equity ratio.
Return on Equity.
3. What is the implication for a company’s Balance Sheet when the Debt Ratio is greater than 1?
The company paid back more debt during the preceding year than it borrowed.
The company’s debt is greater than owner’s equity.
The company has more debt than assets and the owner’s equity is negative.
Back to the top
© 2017 GoSkills Ltd.
Skills for career advancement