If a Firm Is Growing and Expanding Its Accounts Receivable

question 76

Multiple Choice

If a firm is growing and expanding its accounts receivable and inventories faster than its current operating liabilities its cash flow from operation will normally be:

• A) greater than net income
• B) less than net income
• C) greater than the change in working capital from operations
• D) greater than the change in cash.

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Definitions:

Truncate

To shorten something by cutting off a part of it, commonly used in the context of modifying data, strings, or numerical values in computing.

Negotiable Instrument

A written document guaranteeing the payment of a specific amount of money, either on demand or at a set time.

Stock Certificate

A physical document that represents ownership of shares in a company.

Certificate of Deposit

A time-bound, interest-bearing financial product offered by banks, requiring the holder to leave a lump-sum deposit untouched until maturity.