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Which of the following activities result in an increase in a firm's cash? decrease inventory decrease...

Which of the following activities result in an increase in a firm's cash?

decrease inventory

decrease accounts payable

pay dividends

repurchase of common stock

None of These

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Answer #1

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Answer is Decrease inventory

Decrease inventory activity will result in an increase of cash flow.

A decrease in inventory would lead to positive cash flows, since reducing inventory has a positive effect on the cash flows. When we sell inventory the cash amount which was blocked gets released, which leads to increase in cash flows for the company.

Decreased account payable will lead to decrease in cash flows as company will have to pay the amount due for trade payables.

Pay dividend will lead to decrease in cash flows, as dividend payout to shareholders will lead to outflows of cash for the company.

Repurchase of common stock will lead to decrease in cash flows, because company will have to pay the shareholders for repurchase of shares which leads to cash outflows.

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