- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 5. Analyzing Statements of Cash Flows II
- Subject 1. Evaluating Sources and Uses of Cash
CFA Practice Question
What is the primary reason why lenders are interested in operating cash flows as well as earnings?
B. They want to assess a company's future equity value and underwrite an issuance of securities for a company that has high expected operating cash flows.
C. They want to assess whether or not a company is a good credit risk.
A. They want to know if the company can meet or exceed its past quarterly dividend payments.
B. They want to assess a company's future equity value and underwrite an issuance of securities for a company that has high expected operating cash flows.
C. They want to assess whether or not a company is a good credit risk.
Correct Answer: C
Lenders want to maximize the likelihood that they will be repaid in full. Payments are made with available cash flow.
User Contributed Comments 3
| User | Comment |
|---|---|
| danlan | Lenders are not interested in dividend payments(A) or equity value(B), they are for shareholders. |
| ColonelCFA | touche |
| johntan1979 | Interest coverage |