The introductory phase of a company's life cycle will most likely have net cash:
A)provided by investing activities.
B)used in financing activities.
C)used in investing activities.
D)provided by operating activities.

Question

Quizplus · Accepted Answer

Most companies in the introductory (start-up)phase experience negative net operating cash flows (that is,net cash used in operating activities).Also during the introductory phase,these companies are spending significant amounts of cash on long-term assets,resulting in negative investing cash flows (that is,net cash flows used in investing activities).To fund these negative investing and operating cash flows,companies in the introductory phase rely heavily on cash obtained through financing activities (that is,net cash flows provided by financing activities).

The Introductory Phase of a Company's Life Cycle Will Most