A cumulative cash deficit indicates a firm:
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 its needs internally.
E)is using its cash wisely.

Question

Quizplus · Accepted Answer

A cumulative cash deficit means that a company has been consistently experiencing negative cash flows over a period of time. This indicates that the company may have a short-term need for external funding to continue operations and meet its obligations.

A Cumulative Cash Deficit Indicates a Firm