A cumulative cash deficit indicates a company:
A) has at least a short-term need for external funding.
B) is facing long-term financial distress.
C) will go out of business within the year.
D) is capable of funding all of its needs internally.
E) is using its cash wisely.

Question

Quizplus · Accepted Answer

A cumulative cash deficit means that a company is consistently spending more cash than it is bringing in. This indicates that the company has a short-term need for external funding to cover its expenses and liabilities until it can achieve profitability.

A Cumulative Cash Deficit Indicates a Company