Analysts following Armstrong Products recently noted that the company's operating net cash flow increased over the prior year, yet cash as reported on the balance sheet decreased. Which of the following factors could explain this situation?

Question

Quizplus · Accepted Answer

The increase in operating net cash flow indicates that the company generated more cash from its core operations, but the decrease in cash reported on the balance sheet suggests that the company used some of that cash for other purposes. Investing in a new profitable plant could be a reason for this decrease in cash, as the cash outflow for the investment would not appear in the operating net cash flow calculation. Options A, B, and E would increase cash, while option D would not impact net cash flow.

Analysts Following Armstrong Products Recently Noted That the Company's Operating