Question

If a company's net cash flows from operating activities is positive, which of the following is...

If a company's net cash flows from operating activities is positive, which of the following is always true?

a)operating cash inflows were greater than operating cash outflows

b)sales revenue was greater than expenses

c)assets were greater than liabilities

d)the net overall change in cash was positive

e)the ending cash reported on the balance sheet was greater than the beginning cash reported on the balance sheet

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Answer #1

Answer: A = Operating Cash inflows were greater than operating cash outflows.

>> If operating cash inflows are greater than operating cash outflows then always net cash flows from operating activities are positive.

>> If Sales revenue was greater than expenses then there may be chance of non-cash expenses or non-cash transaction expenses or incomes. i.e Depreciation, Accrual incomes, and accrual expenses. So there is a chance of getting negative operating activity net cash flows

>>Even Assets were greater than liabilities their is a chance of getting negative operating activity net cash flows.

>> Net overall change is cash and opening and ending cash is positive doesn't mean there is always a chance of getting negative operating activity net cash flows.

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