Last year Aldrin Co. had negative net cash flow, yet its cash on the balance sheet increased. What could explain these events?
A) Aldrin issued long-term debt.
B) Aldrin repurchased some of its common stock.
C) Aldrin sold some of its assets.
D) Statements a and b are correct.
E) Statements a and c are correct.

Question

Quizplus · Accepted Answer

If Aldrin issued long-term debt (A), this inflow of cash would increase its cash balance on the balance sheet even if its net cash flow was negative. Similarly, if Aldrin sold some of its assets (C), this would also result in an inflow of cash and an increase in its cash balance on the balance sheet, even if its net cash flow was negative. Therefore, only statements a and c are correct.

Last Year Aldrin Co