Firms with Significant Net Income Always Have Significant Cash Generated

question 57

True/False

Firms with significant net income always have significant cash generated from operating activities.

---

Definitions:

Net Operating Income

is the total profit of a business after deducting operating expenses but before subtracting taxes and interest.

Contribution Margin Ratio

A metric that reveals the percentage of sales revenue that exceeds variable costs and contributes to covering fixed costs and generating profit.

Margin of Safety

Represents the extent to which sales can drop before a business reaches its break-even point.

Units

Units refer to the individual items or quantities that are produced, sold, or held in inventory.