In interpreting a statement of cash flows, excessive sales of property, plant and equipment combined with a lack of cash from financing activities may indicate that the company is selling productive assets to raise cash to cover operating expenses which, in the long run, will limit future growth.

Question

Quizplus · Accepted Answer

Excessive sales of property, plant and equipment without enough financing activities may suggest that the company is relying on those sales to cover operating expenses, which will ultimately limit potential growth.

In Interpreting a Statement of Cash Flows, Excessive Sales of Property