Which of the Following Alternatives Could Potentially Result in a Net

question 97

Multiple Choice

Which of the following alternatives could potentially result in a net increase in a company's free cash flow for the current year?

• A) Reducing the days-sales-outstanding ratio.
• B) Increasing the number of years over which fixed assets are depreciated.
• C) Decreasing the accounts payable balance.
• D) All of the answers above are correct.
• E) Answers a and b are correct.

---

Definitions:

Operating Activities

Tasks and transactions related to the core business functions of a company, such as selling products and providing services, integral to generating revenue.

Direct Method

A costing method that directly allocates service department costs to producing departments without any intermediate allocation steps.

Operating Activities

Refers to the primary revenue-generating activities of a business, typically including sales, service delivery, and associated costs.

Indirect Method

A way of preparing a cash flow statement where net income is adjusted for non-cash transactions and changes in working capital.