CFA Practice Question

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CFA Practice Question

Shortfalls in operating cash flow can generally be financed by equity and/or debt in the long run. True or False?
Correct Answer: False

In the long run, equity and debt financing is not a dependable source of financing for an operating cash flow shortfall.

User Contributed Comments 6

User Comment
Yooo Answering a question with questions. Who would lend to this type of company? Do you want to own the stock?
Done There are many way in the real world to do creative financing that we would lend to this company under certain conditions.
whoi a. be in the right decade
b. sell a wonderful/interesting story about your visionary product
c. get cash from different sources ;)
eb2568 d. retire before your company implodes
Farina ever looked on the AIM market? You can see a whole bunch of them.
dbedford I would think that in the long run investors and lenders would see your operating cash short falls and not think of your business as worth investing in and therefore it's not a good long run solution because there won't be long run equity and debt options
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