On a statement of cash flows, which of the following are signs of a healthy company?
A) Investing activities include more sales of long-term assets than purchases.
B) Financing activities are dominated by borrowing.
C) Operating activities are the major source of cash.
D) Operating activities provide less cash than net income.

Question

Quizplus · Accepted Answer

Operating activities being the major source of cash indicates that the company is generating enough cash from its core operations to fund its other activities. This is a sign of a healthy company as it is less reliant on external funding sources. Options A and B could be seen as signs of a company trying to generate cash quickly, which may not be sustainable in the long run. Option D suggests that the company is not converting its net income into cash, which could indicate issues with collecting receivables or managing inventory.

On a Statement of Cash Flows, Which of the Following