Question

How can companies increase the value of cash flow transactions from operating, investing, and financing activities?

a) By reducing operational expenses
b) By increasing debt levels
c) By selling long-term assets
d) By decreasing sales revenue

Answer 1

Companies can increase the value of cash flow transactions by reducing operational expenses, increasing debt levels, and selling long-term assets.

Step-by-step explanation:

Companies can increase the value of cash flow transactions by:

1. Reducing operational expenses: By cutting costs and increasing efficiency, companies can improve their cash flow from operating activities. This can be achieved through strategies such as streamlining processes, negotiating better deals with suppliers, and reducing waste.
2. Increasing debt levels: Companies can raise more capital by taking on debt through loans or issuing bonds. This additional capital can then be used for investments or expansion, increasing the value of cash flow transactions.
3. Selling long-term assets: Companies can generate cash flow by selling off long-term assets that are no longer needed or are underutilized. This can provide a boost to cash flow from investing activities.