Which One of the Following Statements Related to the Cash

question 22

Multiple Choice

Which one of the following statements related to the cash flow to creditors must be correct?

• A) If the cash flow to creditors is positive, then the firm must have borrowed more money than it repaid.
• B) If the cash flow to creditors is negative, then the firm must have a negative cash flow from assets.
• C) A positive cash flow to creditors represents a net cash outflow from the firm.
• D) A positive cash flow to creditors means that a firm has increased its long-term debt.
• E) If the cash flow to creditors is zero, then a firm has no long-term debt.

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Definitions:

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total benefits to society from the trade of goods or services.

Equilibrium

A state of balance where demand equals supply in a market, leading to a stable price.

Total Surplus

The aggregate of consumer surplus plus producer surplus in a marketplace, symbolizing the overall advantages to society.

Consumer Surplus

The incongruity between the price consumers are willing to offer for a good or service versus the final cost.