On a statement of cash flows,which of the following is a sign of a healthy company?
A)Investing activities include more sales of long-term assets than purchases.
B)Financing activities are dominated by borrowing.
C)Operating activities are the major source of cash.
D)Net Cash Provided by Operating Activities is less than net income.

Question

Quizplus · Accepted Answer

A major source of cash from operating activities indicates that the company's core business is generating cash to fund its operations, which is a sign of health. Option A indicates that the company is divesting assets, which may not be sustainable in the long run. Option B shows that the company is relying heavily on debt, which may be a cause for concern. Option D indicates that the company is not converting its net income into cash, which may suggest issues with managing its working capital.

On a Statement of Cash Flows,which of the Following Is