An increase in profits indicates an improvement in cash flow.

Name: An increase in profits indicates an improvement in cash flow.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

An increase in profits does not necessarily indicate an improvement in cash flow because profits are calculated based on revenues and expenses, while cash flow measures the actual inflow and outflow of cash. Profits can increase due to non-cash items like depreciation, or there may be delays in receiving cash from sales, both of which do not directly affect cash flow.

An Increase in Profits Indicates an Improvement in Cash Flow