Which item may be of concern when analyzing cash flow from operating activities?
A) Increasing inventories.
B) Decreasing accounts receivable.
C) Repayment of debt.
D) Payments of dividends.

Question

Quizplus · Accepted Answer

Increasing inventories can signal a decrease in cash flow from operations as more money is being tied up in inventory. This can indicate slower sales or production issues. Decreasing accounts receivable, repayment of debt, and payments of dividends all typically signal positive cash flow from operations.

Which Item May Be of Concern When Analyzing Cash Flow