1. Lincoln Ltd issued a $20,000 200-day note at 10%, and used the cash to pay for salaries. It also issued long-term debt worth $90,000 at 10% annually and used the cash to purchase equipment for the new office. The combined effect of these transactions is least likely to be:

A. a decrease in operating cash flow by $20,000.
B. an increase in financing activity by $110,000.
C. an increase in investing activity by $20,000.


2. In 2012, PIA recorded unearned revenue related to advance booking of its tickets that it will recognize as revenue during 2013. Ignoring income taxes, recognizing advance sale revenue will most likely have which of the following effects on cash from operations in 2013?

A. A decrease.
B. No effect.
C. An increase.


3. An analyst has gathered the following information about a company:

CAD millions

Cash flow from operating activities                                       112.2
Cash flow from investing activities                                         (15.8)
Cash flow from financing activities                                         26.5
Net change in cash for the year                                                 122.9
Interest paid (included in CFO)                                                 13.3
Taxes paid (tax rate of 30%)                                                          10.0
Total debt, end of year                                                                      462.5

The cash flow debt coverage ratio for the year is closest to:

A. 19.2%.
B. 24.3%.
C. 26.6%.

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