Which Item May Be of Concern When Analyzing Cash Flow

question 31

Multiple Choice

Which item may be of concern when analyzing cash flow from operating activities?

• A) Increasing inventories.
• B) Decreasing accounts receivable.
• C) Repayment of debt.
• D) Payments of dividends.

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Definitions:

Perfectly Elastic

Perfectly elastic refers to a situation in economic theory where the quantity demanded or supplied of a good changes infinitely in response to any change in price.

Price-taker Industry

An industry in which companies have no control over the prices they charge because these prices are determined by the overall supply and demand in the market.

Total Revenues

The total sum of money a company earns from selling goods or providing services over a specified time frame.

Total Costs

The sum of all expenses incurred in the production of goods or services, including both fixed and variable costs.