Company A reports sales of $100,000 and net income of $15,000. Company B reports

Question

Company A reports sales of $100,000 and net income of $15,000. Company B reports sales of $100,000 and net income of $10,000. Therefore: A Company A’s cash flow may be higher or lower than Company Bs cash flow even though As net income is higher B Company B is creating less value for its shareholders than Company A C Company Bs accounts receivable must be higher than Company As accounts receivable D Company As cash flow is $5000 more than Company Bs cash flow Company A reports sales of $100,000 and net income of $15,000. Company B reports sales of $100,000 and net income of $10,000. Therefore: A Company A’s cash flow may be higher or lower than Company Bs cash flow even though As net income is higher B Company B is creating less value for its shareholders than Company A C Company Bs accounts receivable must be higher than Company As accounts receivable D Company As cash flow is $5000 more than Company Bs cash flow A Company A’s cash flow may be higher or lower than Company Bs cash flow even though As net income is higher B Company B is creating less value for its shareholders than Company A C Company Bs accounts receivable must be higher than Company As accounts receivable D Company As cash flow is $5000 more than Company Bs cash flow

Explanation / Answer

Ans: (A) Company A’s cash flow may be higher or lower than Company B's cash flow even though A's net income is higher.

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