A strong statement of cash flows indicates that significant cash is being generated by:
A)Operating activities.
B)Financing activities.
C)Investing activities.
D)Effective tax planning.

Question

Quizplus · Accepted Answer

A strong statement of cash flows indicates that a significant amount of cash is being generated through the company's operating activities, such as selling its products or services. This is a positive sign for investors, as it shows that the company is able to generate cash from its core business operations. Financing activities, such as issuing or repurchasing stock, and investing activities, such as acquiring or selling assets, can also generate cash, but a strong statement of cash flows typically emphasizes strong operating cash flow. Effective tax planning can help reduce the company's tax liabilities, but it does not directly contribute to generating cash.

A Strong Statement of Cash Flows Indicates That Significant Cash