If a company reports a large amount of net income on its income statement during a year, the firm will have:
A)positive cash flow.
B)negative cash flow.
C)zero cash flow.
D)Any of these scenarios are possible.

Question

Quizplus · Accepted Answer

Net income does not directly equate to cash flow, as it includes non-cash items like depreciation and changes in working capital. Therefore, a company can have positive, negative, or zero cash flow despite reporting a large net income.

If a Company Reports a Large Amount of Net Income