The statement concerning the cash adequacy ratio that is true is:
A)It expresses the cash flow from operating activities as a percentage of capital expenditure plus dividends
B)It measures the entity's ability to reinvest in its operations and to make distributions to owners from its operating cash flow
C)A ratio result greater than one suggests a good performance
D)All the statements are true

Question

Quizplus · Accepted Answer

All the statements accurately describe aspects of the cash adequacy ratio, including its calculation, purpose, and interpretation.

The Statement Concerning the Cash Adequacy Ratio That Is True