Last Year, Tucker Technologies Had (1) a Negative Net Cash

question 48

Multiple Choice

Last year, Tucker Technologies had (1) a negative net cash flow from operations, (2) a negative free cash flow, and (3) an increase in cash as reported on its balance sheet. Which of the following factors could explain this situation?

• A) The company had a sharp increase in its inventories.
• B) The company had a sharp increase in its accrued liabilities.
• C) The company sold a new issue of common stock.
• D) The company made a large capital investment early in the year.
• E) The company had a sharp increase in its depreciation and amortization expenses.

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Definitions:

Clientele Effect

A theory suggesting that changes in dividend policy may attract different groups of investors based on their preferences for dividend payouts versus capital gains.

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its stock price, typically expressed as a percentage.

Price/earnings Ratio

A valuation metric for companies, calculated as the market value per share divided by the earnings per share.