Question

Which of the following is a cash inflow for a firm?

Select one:

a. Buying back stocks.

b. Decreasing accounts receivable.

c. Paying dividend to shareholders.

d. Increasing inventories.

Answer 1

Option b. is correct

Decreasing accounts receivable is a  cash inflow for a firm because it indicates that the company is collecting cash faster. In other words the customers are paying soon resulting in a cash inflow to the firm.

Option a is incorrect because buying stocks will result in a cash outflow

Option c is incorrect because the dividends paid to shareholderes decreases cash

Option d is incorrect increasing inventory means the company is paying for those inventory which results in cash out flow