Weakening profitability,from reduced sales or reduced profit margins on existing sales, signals the beginning of the decline phase, but ever-declining accounts receivable and inventories can produce positive cash flow from operations.

Question

Quizplus · Accepted Answer

Even though profitability may weaken during the decline phase, decreasing accounts receivable and inventories can lead to positive cash flow from operations as the company collects on outstanding debts and reduces its inventory levels.

Weakening Profitability,from Reduced Sales or Reduced Profit Margins on Existing