When a Company Reports Negative Net Cash Flows from Operations

question 4

Multiple Choice

When a company reports negative net cash flows from operations _____.

• A) ratio of equity to annual cash expenses helps in assessing the survival of the company
• B) ratio of equity to monthly cash expenses helps in assessing the survival of the company
• C) ratio of cash to monthly cash expenses helps in assessing the survival of the company
• D) ratio of accounts payable to annual financing expenses helps in assessing the survival of the company

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Definitions:

Price Level

A measure of prices in a given month or year in relation to prices in a base year.

Medium of Exchange

A mechanism or item used to facilitate trade by avoiding the limitations of barter, such as currency or digital forms of money.

MV Rises

A notation that can imply an increase in the velocity of money, which is the frequency at which one unit of currency is used to purchase domestically-produced goods and services within a given time period.

PQ Falls

This term is not sufficiently defined to provide a clear and specific definition without additional context; it could potentially relate to a concept within economics, involving a decrease in quantity (Q) and price (P).