Question

True or false: Two common ways to assess a company's ability to internally finance expansion needs are the capital acquisition ratio and free cash flow.

Answer 1

Companies are known to expand finance in different forms. Two common ways to assess a company's ability to internally finance expansion needs are the capital acquisition ratio and free cash flow is a true statement.

The cash flow is made of 3 types that companies uses should track and analyze to determine the liquidity and solvency of the business. They are

• Cash flow from operating activities,
• Cash flow from investing activities
• Cash flow from financing activities.

Financing expansion by companies is done in a lot of ways. An individual can use their own money, borrow from friends and family, use internally generated funds etc. to finance their firms.

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