A Company Reports the Following Information from the Statement of Cash

question 125

Multiple Choice

A company reports the following information from the statement of cash flows: Which line item provides a signal that the company may have cash flow problems?

• A)net cash provided by operating activities
• B)net income
• C)net cash provided by investing activities
• D)net cash used by financing activities

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Definitions:

Cash Inflows

Money or other forms of financial assets that enter a company, typically from sales, investments, financing, and other business activities.

Depreciation Value

The reduction in value of an asset over time due to wear and tear or obsolescence.

Internal Rate of Return (IRR)

The yield rate at which all of a project's cash flows' net present value becomes null.

Required Return

The minimum expected return an investor views as acceptable for an investment, based on its risk level.