Question

Cash flow from operating activities is decreased by: depreciation and amortization a decrease in accounts receivable....

Cash flow from operating activities is decreased by:

depreciation and amortization

a decrease in accounts receivable.

a decrease in inventory.

a decrease in accounts payable.

All of the above

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Answer #1

Answer - a decrease in accounts payable

Reason - Cash Flow from Operating Activities = Net Income + Depreciation + Adjustments To Net Income + Changes In Accounts Receivables + Changes In Liabilities + Changes In Inventories + Changes In Other Operating Activities

To calculate cash flow from operating activities we add depreciation and amortisation so it increases cash flow from operating activities.

A decrease in account receivables and decrease in inventory implies cash inflow which again increases cash flow from Operating activities.

But, a decrease in accounts payables means cash out flow and thus it decreases cash flow from operating activities.

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