If cash flows from operating activities is a negative amount:
A) The company must have a loss for the year.
B) The company must have a net profit for the year.
C) The company must have paid off more debts than it earned during the year.
D) The company may have profit or a loss for the year.

Question

Quizplus · Accepted Answer

Negative cash flows from operating activities indicate that the company is spending more cash on its operations than it is generating, but this does not necessarily mean the company has a loss. Non-cash expenses, changes in working capital, or other factors can result in negative operating cash flow even if the company is profitable.

If Cash Flows from Operating Activities Is a Negative Amount