Answered: An increase in net working capital…

An increase in net working capital causes a. A cash inflow b. A cash outflow c. Does not affect cash flow d. Depends on upon accrual accounting

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter2: Developing The Business Idea

Section: Chapter Questions

Problem 18DQ

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Concept explainers

Cash Flow Statement Analysis

A company's cash flow is the movement of its cash inflows and cash outflows. A cash flow statement is prepared to determine changes in an organization's cash position. A cash flow statement shows how much money was generated and spent on the business during the fiscal year. The cash flow analysis is a method of analyzing an organization's investing, financing, and operating activities. A cash flow statement reveals an organization's liquidity and solvency, as well as its ability to change cash flows in the future. It eliminates the other effects of accounting methods by improving the comparability of different organizations' operational performance.

Question

An increase in net working capital causes

a. A cash inflow

b. A cash outflow

c. Does not affect cash flow

d. Depends on upon accrual accounting

Definition Definition

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