Question

Which is consistent with a company recording a large operating loss but still having healthy cash flows from operations?

Answer 1

A company recording a large operating loss but still having healthy cash flows from operations could be due to non-cash expenses, cash inflows from other sources, and effective cash management.

Step-by-step explanation:

A company recording a large operating loss but still having healthy cash flows from operations could be attributed to several factors:

1. The company may have non-cash expenses such as depreciation or amortization that are reducing its reported profits but not affecting its actual cash flows from operations.
2. The company may have generated significant cash inflows from sources other than its core operating activities, such as proceeds from the sale of assets, investments, or financing.
3. The company may have a strong and efficient cash management system in place, allowing it to effectively manage its cash flows and maintain positive cash balances despite operating losses.

Therefore, it is possible for a company to experience operating losses while still having healthy cash flows from operations due to these factors.