A Business Entity Generates a Cash Flow from Operations of 500

question 6

Multiple Choice

A business entity generates a cash flow from operations of 500 in X1,600 in X2 and 700 in X3.The cash outflow from investing is 250 in X1,350 in X2 and 450 in X3 and is only dedicated to the maintenance of the competitive position of the firm.Cash outflow from financing is 150 in X1,-300 in X2 and -600 in X3.What is true of the available cash flow?

• A) It is the same in each of the consecutive years.
• B) It increases by 40% over the three years.
• C) It declines by increasing proportions each year over the previous one.
• D) It is equivalent,with an opposite sign to the cash flow from financing.

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Definitions:

Quantity Theory of Money

A theory stating that the general price level of goods and services is directly proportional to the amount of money in circulation.

Price Level

A measure of the average prices of goods and services in an economy at a given time, often used to gauge inflation.

Real GDP

Gross Domestic Product adjusted for inflation, providing a more accurate measure of economic output over time by valuing goods and services at constant prices.

Money Supply

The complete inventory of monetary assets within an economy at a defined moment.