There is a ceiling on each employee's annual earnings that are ...

[APUS57]

There is a ceiling on each employee's annual earnings that are subject to federal income taxes.
  Indicate whether the statement is true or false

Question 2

What are the three areas of a cash flow statement that an analyst should cover at a minimum? Discuss each area by explaining items an analyst should be concerned with when reviewing the cash flow statement.
 
  What will be an ideal response?

[bobsmith]

Answer to Question 1

F

Answer to Question 2

An analysis of the statement of cash flows should, at a minimum, cover the analysis of cash flow from operating activities, analysis of cash inflows and analysis of cash outflows. When analyzing the cash flow from operating activities, the analyst should be concerned with the success or failure of the firm in generating cash from operations, the underlying causes of the positive or negative operating cash flow, the magnitude of positive or negative operating cash flow and the fluctuations in cash flow from operations over time. Analyzing cash inflows is important to determine if the firm is generating cash from operations, the preferred method, or if the firm must rely on external sources. Using external sources to generate the majority of cash year after year should be investigated further. When analyzing the cash outflows, the analyst should consider the necessity of the outflow and how the outflow was financed.