Shaila Company has a current ratio of 2.5. What will be the effect 1 point of a purchase of inventory with cash on the acid-test ratio and on working capital? O No effect on acid-test ratio and no effect working capital. O No effect on acid-test ratio and decreased working capital. O Decreased acid-test ratio and no effect on working capital. O Decreased acid-test ratio and decreased working capital. 1 point An increasing average collection period indicates * The company is generating more income. O The company is becoming less efficient in its collection policy. The company is becoming more efficient in its collection policy Accounts receivable are going down. 1 point Which of the following is NOT a purpose of the statement of cash flows? * To show all investing and financing transactions. O To show operating expenses for a period of time. To show cash flow from operations. O To show cash flow from financing activities O To show cash flow from investing activities. 1 point Holding all other things constant, which of the following represents a cash outflow? * The company increases accounts payable O The company acquires inventory. The company sells a machine. The company receives a bank loan 1 point When calculating a company's free cash flow from earnings before interest and taxes we must add back depreciation, amortization and depletion expense and allowances because * They approximate the value of fixed asset purchases during the year. They are non-cash expenditures. O They are unrelated to the amount of taxes paid during the year. The accounting method for reporting such expenses may be different from that reported to the taxing authority