A business entity is generating small operating losses year after year and has a large positive cash flow from operations year after year.

Question

Quizplus · Accepted Answer

This type of business entity is likely a utility or infrastructure provider that requires significant investments in assets such as pipelines or rail tracks, which are rapidly depreciable. While the operating losses may be small, the positive cash flow from operations suggests that the business is able to cover its ongoing expenses and investments. Therefore, it is not a doomed business, nor one that cannot invest in new assets.

A Business Entity Is Generating Small Operating Losses Year After