A company has positive cash flow from investing and financing activities,but negative cash flow from operating activities.The likely result is:
A)investors may not buy the company's stock because the receipt of dividends is unlikely.
B)investors will continue to buy stock since the company's growth prospects are good.
C)Creditors will continue to lend money to the company.
D)Creditors will demand immediate repayment of all outstanding debt.

Question

Quizplus · Accepted Answer

Positive cash flow from investing and financing activities indicates that the company is selling fixed assets and borrowing funds.If there is not positive cash flow from operating activities,the payment of dividends to stockholders is unlikely.This does not indicate,however,that the company is at risk of immediate default on debt.

A Company Has Positive Cash Flow from Investing and Financing