The amount of cash flow from operations indicates:
A)the extent to which operating activities generate more cash than they use.
B)the extent to which revenues exceed expenses.
C)the extent to which liabilities exceed shareholders' equity.
D)the extent to which more cash is generated from investing activities than financing activities.
E)how much free cash flow a company has.

Question

Quizplus · Accepted Answer

Cash flow from operations measures the amount of cash generated or used by a company's normal business operations, indicating whether the company is generating enough cash to cover its expenses and investments. A positive cash flow from operations indicates that a company is generating more cash than it is using, while a negative cash flow from operations indicates the opposite. Therefore, option A is the best choice as it correctly states that cash flow from operations indicates the extent to which operating activities generate more cash than they use.

The Amount of Cash Flow from Operations Indicates