All of the following are fundamental causes of cash flow difficulties in many start-up companies, except for:
A)Lead \ Lag relationship in cash inflows and outflows
B)Inadequate financing
C)Overcapitalization
D)High growth rate sales

Question

Quizplus · Accepted Answer

Overcapitalization refers to having too much capital, which should not cause cash flow difficulties. On the contrary, it could actually improve cash flow as the company could use the excess funds for investments or to cover expenses during a period of low cash inflows. The other choices, lead-lag relationship in cash flows, inadequate financing, and high growth rate sales, are all common causes of cash flow difficulties in start-up companies.

All of the Following Are Fundamental Causes of Cash Flow