Question

Which of the following are causes of deviations in cash flows from operating activities? (you may select more than one answer. single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. any boxes left with a question mark will be automatically graded as incorrect.) check all that apply

a. changes in working capital management
b. unanswered corporate life cycle
c. unanswered free cash flow
d. unanswered seasonality

Answer 1

Deviations in cash flows from operating activities can be caused by changes in working capital management and seasonality in business operations. The correct answer is a. changes in working capital management.

Step-by-step explanation:

The causes of deviations in cash flows from operating activities can include a variety of factors. Two that are commonly acknowledged are:

• Changes in working capital management: Adjustments in the accounts receivable, inventory levels, or accounts payable can significantly affect the cash flow from operating activities. Efficient or inefficient management of these components can lead to an increase or decrease in cash flow, respectively.
• Seasonality: Some businesses have seasonal peaks and troughs in their operations, leading to fluctuations in cash flow. High sales periods might result in increased cash flows, while off-seasons can cause cash flow issues.

The other options listed, 'corporate life cycle' and 'free cash flow' do not directly cause deviations in cash flows from operating activities; instead, they are broader concepts that describe the stages of a business and the cash that is available after capital expenditure, respectively.