Sam\'s Motels\' operations provided a negative net cash flow last year, yet the

Question

Sam's Motels' operations provided a negative net cash flow last year, yet the cash shown on its balance sheet increased. Which of the following statements could explain the increase in cash, assuming the company's financial statements were prepared under generally accepted accounting principles?

The company had high depreciation expenses.

The company repurchased some of its common stock.

The company dramatically increased its capital expenditures.

The company retired a large amount of its long-term debt.

The company sold some of its fixed assets.

The company had high depreciation expenses.

The company repurchased some of its common stock.

The company dramatically increased its capital expenditures.

The company retired a large amount of its long-term debt.

The company sold some of its fixed assets.

Explanation / Answer

The company sold some of its fixed assets. since if the company sells its assets then it will have positive cash inflow from investing activities and they will counter negative cash flows from operations. Thus the overall cash flows would be positive which would mean increase in cash in Balance sheet

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