Which item may be of concern when analyzing cash flow from financing activities?
A)Increasing inventories.
B)Borrowing each year to repay debt from prior years.
C)Repayment of debt.
D)Payments of dividends.

Question

Quizplus · Accepted Answer

Borrowing each year to repay debt from prior years may indicate a potential liquidity issue or financial instability, as it suggests the company is not generating enough cash to cover its debt obligations.

Which Item May Be of Concern When Analyzing Cash Flow