If a Company Reports a Net Loss It

question 16

Multiple Choice

If a company reports a net loss it

• A) may still have a net increase in cash.
• B) will not be able to pay cash dividends.
• C) will not be able to get a loan.
• D) will not be able to make capital expenditures.

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Definitions:

Capital to Purchase Fixed Assets

Financial resources allocated for the purchase of long-term physical assets that a company uses in its operations.

Cash Flow Statement

A financial document providing comprehensive detail about a company's cash inflows and outflows over a specified period.

Noncash Asset

Assets owned by a business not in the form of cash but may be converted into cash within a year, such as inventory and property.

Change in Cash

The difference in a company's cash balance over a specified period, indicating the net increase or decrease in cash.