19. If net income depreciation is positive, it means that a company: Has suffici

Question

19. If net income depreciation is positive, it means that a company: Has sufficient cash flow from business operations to pay all cash operating expenses, including interest expense and scheduled long-term debt repayment. a.) b.) Has sufficient cash flow from business operations to pay all cash operating expenses, including interest expense. c)May or may not have sufficient cash flow from business operations to pay all cash operating expenses, including interest expense, since net income + depreciation is only a proxy - or rough estimate of a company's actual cash flow from business operations.

Explanation / Answer

Answer - A

As depreciation is a non cash expense

We cannot treat it as a cash expenditure

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