Question
When a company reports negative net cash flows from operations, which of the
following information is more relevant to help the firm stay proactive? C ratio
of equity to annual cash expenses O ratio of equity to monthly cash expenses O
ratio of cash to monthly cash expenses ratio of accounts payable to annual
financing expenses O all of the above can be used
Answer & Explanation
When a company reports negative net cash flows from operations,
understanding its liquidity and ability to cover expenses is crucial. Let's evaluate
each option:
1. Ratio of equity to annual cash expenses: This ratio helps assess how
long the company can sustain its operations using its equity if it continues
to have negative cash flows.
When a company reports negative net cash flows from operations, which of the
following information is more relevant to help the firm stay proactive? C ratio
of equity to annual cash expenses O ratio of equity to monthly cash expenses O
ratio of cash to monthly cash expenses ratio of accounts payable to annual
financing expenses O all of the above can be used
Answer & Explanation
When a company reports negative net cash flows from operations,
understanding its liquidity and ability to cover expenses is crucial. Let's evaluate
each option:
1. Ratio of equity to annual cash expenses: This ratio helps assess how
long the company can sustain its operations using its equity if it continues
to have negative cash flows.
