If a company reports negative net cash flow from operating activities,positive net cash flow from investing activities,and zero net cash flow from financing activities,this suggests that the company is selling its productive assets to cover its operating activities outflows.

Question

Quizplus · Accepted Answer

Negative net cash flow from operating activities implies that the company is spending more on its day-to-day operations than it is earning. However, if it has a positive net cash flow from investing activities and zero net cash flow from financing activities, it means that it is generating cash by selling its productive assets (investing activities) and not taking on any additional debt or equity financing (financing activities). Therefore, it is likely that the company is using the proceeds from asset sales to cover its operating activities outflows.

If a Company Reports Negative Net Cash Flow from Operating