CFA Practice Question
Which of the following indicates a company's ability to cover currently maturing obligations from recurring operations?
A. Cash flow from operations to current liabilities
B. Working capital
C. Quick ratio
Explanation: Free cash flow is the excess of operating cash flow over basic needs.
User Contributed Comments 4
| User | Comment |
|---|---|
| murli | Good one. Current obligations to recurring operations = CFO/CL. Can't use Income while measuring non-income statement elements! |
| chenyx | current obligations to recurring operates=CFO/CL |
| lemec | Actually, recurring operations to current obligations = CFO / CL |
| scottm8571 | The quick ratio is literally defined as "a company's ability to satisfy current liabilities" which include currently maturing obligations. This question did not have to walk this fine a line with the answers given. |