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:

Accounts Receivable

Funds that customers owe to a business for goods or services that have been provided but remain unpaid.

Inventory

The raw materials, work-in-process products, and finished goods that a company holds for the purpose of sale in the near future.

Marketable Securities

Financial instruments that can be easily converted into cash, such as stocks, bonds, or treasury bills.

Operating Activities

Activities that relate directly to the primary business operations of a company, such as selling products or providing services.