On a Statement of Cash Flows, Which of the Following

question 65

Multiple Choice

On a statement of cash flows, which of the following are signs of a healthy company?

• A) Investing activities include more sales of long-term assets than purchases.
• B) Financing activities are dominated by borrowing.
• C) Operating activities are the major source of cash.
• D) Operating activities provide less cash than net income.

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Definitions:

Director Liability

The legal responsibility of corporate directors for actions or omissions that cause harm to the company or its shareholders.

Unlawful Distributions

Financial distributions made by a company to its shareholders that violate laws or the company's own regulations, potentially harming the company or its creditors.

Usurped Corporate Opportunity

An act where an individual takes advantage of an opportunity that rightfully belongs to a corporation, typically violating fiduciary duties.

Director Liability

The legal responsibility of a company's directors to act in the best interest of the company, with potential personal legal consequences for breaches of duty.