Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Net Sales

Financial Accounting

4. Merchandising Operations

Net Sales

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Multiple Choice

Which of the following is a measure of how well a business generates cash flow?

Net Sales

Accounts Receivable

Operating Cash Flow

Gross Profit

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Verified step by step guidance

Understand the concept of Operating Cash Flow: Operating Cash Flow is a financial metric that measures the cash generated by a company's core business operations. It excludes cash flows from investing and financing activities, focusing solely on operational efficiency.

Compare Operating Cash Flow to other options: Net Sales, Accounts Receivable, and Gross Profit are important financial metrics, but they do not directly measure cash flow generation. Net Sales represents revenue, Accounts Receivable tracks money owed by customers, and Gross Profit reflects profitability before operating expenses.

Recognize why Operating Cash Flow is the correct answer: Operating Cash Flow provides insight into a company's ability to generate cash from its regular business activities, which is crucial for assessing liquidity and financial health.

Learn how Operating Cash Flow is calculated: The formula is typically:

Operating Cash Flow = Net Income + Non - Cash Expenses + Changes in Working Capital

. This calculation adjusts net income for non-cash items and changes in current assets and liabilities.

Understand its importance: Operating Cash Flow is a key indicator of a company's ability to sustain operations, pay debts, and invest in growth without relying on external financing.