Which of the following statements concerning the cash flow-production cycle is true?
A) The profits reported in a given time period equal the cash flows generated.
B) A company's operations and finances are independent of each other.
C) Financial statements have nothing to do with reality.
D) The movement of cash to inventory,to accounts receivable,and back to cash is known as the firm's working capital cycle.
E) A profitable company will always have sufficient cash to meet its obligations.

Question

Quizplus · Accepted Answer

The movement of cash to inventory, to accounts receivable, and back to cash is known as the firm's working capital cycle. This cycle is a critical aspect of a company's operations and finances, and it affects the cash flow and profitability of the business. However, it is important to note that profits reported in a given time period do not always equal the cash flows generated, and a profitable company may still face cash flow problems if it has insufficient working capital. Financial statements are supposed to reflect the reality of a company's financial situation, but they are subject to interpretation and manipulation by management or other stakeholders.

Which of the Following Statements Concerning the Cash Flow-Production Cycle