1) Do liabilities that arise during the operating cycle always have a maturity of less than one year?

2. Should the cash outflows of launching a new perfume be considered as an operating outlay or an investment outlay?

3. Do shareholders and lenders carry out financial analysis in the same way?

Answer:

(1).

Yes, liabilities that arise during the operating cycle always have a maturity of less than one year. As we know that operating cycle refers to the period of 12 months during which normal business operations take place, so liabilities arise during this period normally have maturity of less than one year.

(2).

The cash outflows of launching a new perfume will be considered as an investment outlay because this cost is treated as an initial investment and we know that cash outflows of launching a new perfume is known as initial outlow that is why it is treated as investment outlay.

(3).

Shareholders and lenders donot carry out financial analysis in the same way because main motive of financial analysis for shareholders and lenders are different because shareholders mainly do financial analysis for the purpose of knowing worth of equity and increase & decrease in the EPS whereas lenders mainly focus on the short-term and long-term solvency of the company. Hence we can say that Shareholders and lenders donot carry out financial analysis in the same way.