1, Which one of the following is not a factor that changes a company’s pension obligation during the year.
A) Interest cost
B) Actuarial losses (gains)
C) Benefits paid
D) Service cost
E) Contributions to the pension plan
2, A company reports the amounts below in its statement of cash flows.
Net cash flow from investing activities |
$66,480 |
Net cash flow from financing activities |
$30,780 |
Total net cash flow |
$123,000 |
Current liabilities beginning of year |
$19,500 |
Current liabilities end of year |
$23,400 |
What is the company’s operating cash flows to current liabilities ratio?
A) 1.19
B) 1.30
C) 1.20
D) 6.21
E) None of the above
Ans:
1)
E) Contributions to the pension plan
PBO opening balance + Service cost + Interest cost - Retiree benefits = Closing PBO
2)
Ans: C 1.2
Net cash flow from operating activities (Balance) |
$25,740 |
Net cash flow from investing activities |
$66,480 |
Net cash flow from financing activities |
$30,780 |
Total net cash flow |
$123,000 |
Average current liabilities = (beginning +ending) current liabilities/2
Current liabilities beginning of year |
$19,500 |
Current liabilities end of year |
$23,400 |
Average Current liabilities |
$21,450 |
company’s operating cash flows to current liabilities ratio
= Net cash flow from operating activities/ Average Current liabilities
= $25,740/$21,450
=1.2
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