The correct measure of the cash generating ability of a firm is:

Question

Quizplus · Accepted Answer

Cash flow from operations is the correct measure of the cash generating ability of a firm as it shows the cash generated or used by a company's core operations. Working capital and accounts receivable are components of the company's cash flow, but they do not provide a complete picture of the cash generation ability. Net income is not an accurate measure of cash generating ability as it includes non-cash items such as depreciation and amortization.

The Correct Measure of the Cash Generating Ability of a Firm