Is It Possible for a Firm to Have Positive Net

question 91

Multiple Choice

Is it possible for a firm to have positive net income and yet to have cash flow problems?

• A) No, this is impossible since net income increases the firm's cash.
• B) Yes, this can occur when a firm is growing very rapidly.
• C) Yes, this is possible if the firm window-dressed its financial statements.
• D) No, this is impossible since net income and cash are highly correlated.

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Definitions:

U.S. Investment

The activity of allocating resources, usually in the form of capital or money, into the United States' financial assets or business ventures with the expectation of achieving a profit.

Gross Savings

The total amount saved by an economy before accounting for depreciation.

Dramatically Slowed Down

A significant decrease in the pace or speed at which processes, developments, or activities occur.

Industrial Revolution

A period of major industrialization and technological innovation during the late 18th and early 19th centuries, leading to profound changes in society.