Question

Cash Flow from Operations is the difference between which of the following: A. Current assets and...

Cash Flow from Operations is the difference between which of the following:

  • A. Current assets and current liabilities.

  • B. Cash collected from core operating activities and cash used in support of those same activities.

  • C. Revenue and the cash used to pay bills.

  • D. Cash generated by core operations and capital expenditures.

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Answer #1

Cash flow from operations represents the cash generated by a company from its normal business operations. It focuses mainly on the core business activities and does not consider long-term capital expenditure or Investment revenue or expense. Example dividends paid or received are not considered in cash flow from operations.Cash flow from operations can be figured out using either direct method or indirect method. In the indirect method, The net income is adjusted with non cash items to arrive at a cash basis figure.

Cash flow from operations is the difference between the Cash collected from core operating activities and cash used in support of those same activities.

Option 'B' is correct

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