A company that has decreased its inventory between years will cause a decrease in cash flow from operations.

Question

Quizplus · Accepted Answer

When a company decreases its inventory, it means they have sold goods and generated revenue. This increase in revenue will offset the decrease in cash flow from operations, therefore, there will not necessarily be a decrease in cash flow from operations. In fact, if the revenue generated from the sale of inventory is greater than the cost of goods sold, there may be an increase in cash flow from operations.

A Company That Has Decreased Its Inventory Between Years Will