The cash flow to creditors increases when
A)cash is used to reduce accounts payable.
B)new shares of stock are sold for cash.
C)interest is paid on outstanding debt.
D)an asset is sold for cash.
E)a long-term debt is incurred.

Question

Quizplus · Accepted Answer

The cash flow to creditors increases when interest is paid on outstanding debt. This is because interest payments represent a cash outflow from the company to its creditors.

The Cash Flow to Creditors Increases When