Cash flow from operations

Question

Quizplus · Accepted Answer

When the collection rate on receivables rises, more cash is coming in from customers and therefore cash flow from operations increases.

Answer: B
 Making bill payments quicker means that less money is tied up in accounts payable and more cash is available for operations, thus cash flow from operations increases.

Answer: C
 Inventory turnover ratio measures the number of times inventory is sold and replaced in a given period. When this ratio increases, it means that inventory is being sold more quickly, which may be a good thing for the business, but it also means that fewer liquid assets are available, and therefore cash flow from operations decreases.

Answer: D
 Increased production costs mean that more money is being put into the business, resulting in a decrease in cash flow from operations.

Cash Flow from Operations