Cash flow from operations is especially important for those firms that are heavily invested in inventories and use accounts receivables and accounts payables as a major part of business operations.

Question

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Cash flow from operations measures the cash generated or used by a company's core business operations. For firms that rely heavily on inventory and accounts receivables/payables to operate, this measure is particularly important. It shows whether the company is generating enough cash from its operations to pay for these activities without relying on external financing.

Cash Flow from Operations Is Especially Important for Those Firms