When might a negative cash flow be considered positive? Provide an example and explain. | Homework.Study.com (2024)

Get access to this video and our entire Q&A library

• How can a company have negative net income and positive cash flow?
• Explain how a company can report a positive net income and yet still have a negative net operating cash flow.
• Explain why is the accounts receivable negative on the cash flow statement.
• How can a company have a net loss but a positive cash flow?
• Explain why companies have negative cash flow from operations during the introductory phase?
• Explain how a company can have positive net income--perhaps even outstanding earnings--for a month or quarter but have negative cash flow from operations.
• What does a positive account payable mean on the statement of cash flow?
• What does it mean if there is a negative number in cash flow for accounts receivable?
• Does the firm have positive or negative financial leverage? Explain.
• What has to happen to have positive cash flow from investments and from financing activities? Explain.
• Explain how a company can achieve positive cash flows from operating activities despite incurring a net loss for the year.
• How does the statement of cash flows contribute to the question, "How well am I doing?"
• Is a negative amount of cash from financing activities concerning? Explain why or why not.
• Explain what free cash flow ratio is.
• Explain the purpose of the cash flow statement.
• Explain how cash flow data complement the income statement and balance sheet.
• Explain the purposes of the statement of cash flows.
• Describe the cash ratio with an example. Why is this term useful in accounting?
• What assertion would be involved in the decision to use positive rather than negative accounts receivable confirmations?
• Explain how to calculate free cash flow. What is the importance of free cash flow to investors?
• Explain how to calculate free cash flow and the importance of free cash flow to investors.
• Is a negative amount of cash from investing activities concerning? Explain why or why not.
• Discuss how to calculate free cash flow.
• What does free cash flow indicate, and how is it calculated?
• Explain the cash flow statement. What information does it contain and what can it tell you?
• a) What is Positive Accounting Theory? b) Explain the efficiency perspective and the opportunistic perspective of Positive Accounting Theory. c) Explain two criticisms of Positive Accounting Theory.
• Mention the reasons why a negative cash balance is reported as a liability.
• Explain why the Cash Flow Statement is identified as a financial statement.
• What are some advantages and disadvantages of alternatives to discounted cash flows? Include a real life example.
• Which accounting method is approved by GAAP? Why? What are the positives and negatives of each?
• When it is clear that a project will be profitable, why should it be rejected if it has a negative net present value?
• Explain why free cash flow is sometimes referred to as a liquidation concept.
• Explain how to calculate free cash flow, and explain why some investors have more faith in investing based on free cash flow rather than reported net income.
• How do you determine free cash flow?
• Explain why is cash debited when it increases? .
• What are the four basic financial statements? Describe the statement of cash flows, and explain why it is important.
• Why is the statement of cash flows useful?
• Explain where a "gain on sale of assets" goes on the cash flow statement.
• What can be inferred from the negative amounts on a balance sheet?
• Explain why back depreciation is added back in the cash flow statement.
• What are the negative, positive, and neutral aspects of a company's collection and payment of sales tax.
• What are the negative, positive, and neutral aspects of a company paying and collecting sales tax?
• Explain where does the interest paid to go on the statement of cash flows.
• What is the usefulness of the statement of cash flows? Also, discuss the potential shortcomings of it.
• Explain why the interest expense is excluded from the operating cash flow.
• Explain how income is recognized under the cash method of accounting.
• What should an organization with a net loss do in order to show a positive cash flow?
• What are the three statements of cash flows? What or how do we differentiate these?
• What are externalities? Describe positive and negative externalities.
• Explain why cash flow statements are important when assessing the financial strength of an organization.
• Can a statement of cash flows be manipulated? If so, how?
• Why is a debit card called a debit card if in accounting debit means a negative transaction?
• From a critical perspective, can financial statements ever be considered objective or neutral? Explain your answer.
• How does the statement of cash flows sometimes cause a nonarticulation problem?
• Explain the parts of the cash flow statement.
• How is it possible for a company to show positive net income but go bankrupt?
• Explain why are back accounts payable added in the cash flow statement.
• Explain why the statement of cash flows is useful for the users of financial statements.
• Can the cash flow statement be manipulated? If so, how? If not, why not?
• Explain how the statement of cash flows can be prepared by using the worksheet approach.
• Why is depreciation added back to the cash flow statement?
• How can the statement of cash flows be useful when making business decisions?
• How would a decrease in inventories affect free cash flow?
• Explain why a cash flow statement is needed in addition to the balance sheet and income statement.
• What causes a change in cash balance on the cash flow statement?
• Provide an example of how debits and credits impact accounts.
• Explain why cash flow statements are prepared and mention their uses.
• What does it mean when the value of a company's cash flow adequacy ratio is less than 1.0?
• What is the purpose of the statement of cash flows?
• How does gain on sale of equipment affect the cash flow statement?
• Explain how the statement of cash flows helps investors and creditors evaluate management decisions.
• Describe the common accounting term ''cash-to-cash'' and explain why it is used in financial analysis.
• What is the purpose of the cash flow statement?
• What purpose does a cash flow statement serve?
• What is the purpose of a cash flow statement?
• (a) Describe some of the advantages and disadvantages of using the cash-basis method of accounting. (b) Give some examples.
• Why is wage expense recorded as positive in transaction statements?
• What is the purpose and importance of the Statement of Cash Flows?
• What are the purpose and importance of the Statement of Cash Flows?
• In accounting, what is a purpose of a cash flow statement?
• Explain why the write-down of impaired assets is considered a non cash expense.
• Explain how the tax code allows depreciation to contribute to cash flow.
• Explain why earning profit does not always result in a corresponding increase in cash balances.
• Discuss the Advantages and Disadvantages of the Cash Basis of Accounting.
• Assume that you work for a local business journal, explain how the statement of cash flows is beneficial for a small business owner.
• Describe the components of the statement of cash flow.
• Would it always be a bad thing for liabilities to increase? What if borrowing money is cheaper than using up all your cash on a particular expenditure, for example? Explain.
• How to determine if the accounts receivable liquidity ratio is good or bad?
• Why would a business have a strong cash flow but little or no profit? When would the opposite happen?
• Explain theoretically how the recognition of revenue on account (accounts receivable) affect the income statement compared to its effect on the statement of cash flows.
• Explain why statements of cash flows are important when assessing the financial strength of an organization.
• Why is the statement of cash flows important?
• What is the purpose of a free cash flow analysis?
• How does selling equipment affect the statement of cash flows?
• The trouble with discounted cash flow methods is that they ignore depreciation. Do you agree? Explain.
• What are the characteristics of the statement of cash flows ?
• Describe how the received cash for services performed affects the three elements of the accounting equation.
• Which statement is more useful to investors, the statement of cash flows or the income statement? Explain.
• What are the most used techniques in discounting cash flows?
• Why is depreciation considered a non-cash expense?