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Chapter 7:   Funds Analysis, Cash Flow Analysis, and Financial Planning

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1. "Funds" (as in "flow of funds") always means cash and near-cash equivalents.

2. A flow of funds statement (showing sources and uses of funds) is no longer useful to financial managers.

3. A major deficiency of the statement of cash flows is that it doesn't explicitly consider non-cash transactions.

4. A company with profits which increase yearly is, by definition, successful.

5. An increase in an asset is a source of funds.

6. Depreciation is a use of funds.

7. The statement of cash flows, in the US, is divided into three required categories: operating, investing, and financing activities.

8. A forecast balance sheet could be estimated based on a firm's past financial ratios.

9. The cash budget is only as useful as the accuracy of the forecasts used in preparing it.

10. The basic information needed to construct a flow of funds statement is found on the income statement.

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