If a Company Reports Negative Net Cash Flows from Operating

question 111

True/False

If a company reports negative net cash flows from operating activities, positive net cash flows from investing activities, and zero net cash flows from financing activities, this suggests that the company is selling its productive assets to cover its operating activities outflows.

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Definitions:

Sole Proprietorship

A business structure where a single individual owns and runs the business, enjoying full control and responsibility for its debts and liabilities.

Partnership

A lawful business structure involving two or more people who manage and profit together.

Manufacturing Franchise

A type of franchise agreement granting the right to manufacture and sell goods using the franchisor's trademark and business model.

Exclusive Territory

A specific geographic area granted to a retailer, distributor, or franchisee in which they are the only ones allowed to sell certain products or services.