In a healthy business, cash flow from operations will normally be:
A) less than the profit.
B) negative.
C) positive.
D) none of the above.

Question

Quizplus · Accepted Answer

A healthy business generally generates enough cash flow from its daily operations to cover its operating expenses, such as salaries, rent, and supplies. If a business is profitable, it means that its revenues are higher than its expenses, which can contribute to a positive cash flow. However, a business can still be profitable and have negative cash flow if it is investing heavily in new equipment or other long-term assets. Therefore, a positive cash flow is the best indicator of a healthy business.

In a Healthy Business, Cash Flow from Operations Will Normally