Last year,Delip Industries had (1)negative cash flow from operations, (2)a negative free cash flow,and (3)an increase in cash as reported on its balance sheet.Which of the following factors could explain this situation?
A) The company had a sharp increase in its inventories.
B) The company had a sharp increase in its accrued liabilities.
C) The company sold a new issue of common stock.
D) The company made a large capital investment early in the year.
E) The company had a sharp increase in depreciation expenses.

Question

Quizplus · Accepted Answer

C) The company selling a new issue of common stock could explain the increase in cash despite negative cash flow from operations and negative free cash flow. This is because the sale of stock directly increases cash without affecting cash flow from operations.

Last Year,Delip Industries Had (1)negative Cash Flow from Operations, (2)a