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

A decrease in cash reported on the balance sheet could be due to a large investment in a profitable new plant, which would be reflected in the investing section of the cash flow statement. The increase in operating net cash flow suggests that the company is generating more cash from its operations, but this cash is being used for investing activities rather than being retained as cash on the balance sheet. The other choices do not explain this situation as clearly.

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