If Cash Flows Provided by Operating Activities Are a Relatively

question 6

True/False

If cash flows provided by operating activities are a relatively small amount, a company may offset this problem on a short-term basis by cutting back on capital expenditures or by borrowing funds or issuing stock.

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Definitions:

Financial Intermediaries

Institutions that facilitate the channeling of funds from savers to borrowers by intermediating between them.

Credit Needs

The requirement for borrowing funds to finance purchases, investments, or to bridge gaps in cash flow.

Security Needs

The requirement to protect a nation, organization, or individual from various threats, including cyber attacks, terrorism, and theft.

Required Reserve Ratio

The ratio of reserves to deposits that banks are obligated by regulation to hold.