If a company reports a net loss, it:
A) cannot pay cash dividends.
B) cannot obtain a loan.
C) cannot purchase property.
D) may still have an increase in cash.

Question

Quizplus · Accepted Answer

A company can still have an increase in cash despite reporting a net loss, as a net loss only reflects the company's expenses exceeding its revenue for a particular period. Cash can still be generated from activities such as sales and asset sales, or it can be obtained through financing activities such as issuing bonds or obtaining loans. However, the company may choose to reduce or eliminate cash dividends and property purchases if it needs to conserve cash due to the net loss.

If a Company Reports a Net Loss, It