1. Which one of the statement below is false?

a. A company should show a loss for the operating period but have generated positive cash flow for the business.

b. Profit are an accounting measure of performance during a specific period of time.

c. To obtain the operating cash flow, given the net income, we add back depreciation and subtract taxes.

d. Cash flow is an accounting measure of performance during a specific period of time.

2. Often a bank will require a company to pay off its line of credit (return the balance to zero) and keep it there for a specific period of time each year. For example, a requirement might be that the line of credit remains at a zero balance for at least one sixty-day period each year. This is called the clean-up period.

a. True

b. False

3. The return to the investor is the ___

a. reward to the borrower

b. cost to the borrower

c. cost to the manager

d. internal rate of return