CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

What could cause a company to have negative cash flow from operations in the same year in which it had a positive net income?
A. A substantial decrease in inventory
B. A substantial increase in accounts payable
C. A substantial increase in accounts receivable and inventory
Explanation: A company could have negative cash flow from operations in the same year in which it had a positive net income if it had a substantial increase in accounts receivable and inventory due to the company's growth in sales. An increase in accounts receivable represents revenue not yet collected in cash. An increase in inventory represents a cash outflow that is not an operating expense.

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