If a company reports a net loss it
A) may still have a net increase in cash.
B) will not be able to pay cash dividends.
C) will not be able to get a loan.
D) will not be able to make capital expenditures.

Question

Quizplus · Accepted Answer

A company may still have a net increase in cash even if it reports a net loss. This could be due to various reasons such as depreciation, deferred taxes, and non-cash expenses. However, options B, C, and D are not necessarily true for a company reporting a net loss. The company may still be able to pay cash dividends if they have sufficient cash reserves or if they decide to cut back on other expenses. Similarly, they may still be able to get a loan or make capital expenditures if they have a good credit score and adequate collateral.

If a Company Reports a Net Loss It