Which of the following is a source of cash? 1. The purchase of new fixed assets....

Which of the following is a source of cash?

	1.	The purchase of new fixed assets.
	2.	Dividends paid.
	3.	The repurchase of outstanding common stock.
	4.	A decrease in long-term debt.
	5.	A decrease in inventory.

Solutions

Expert Solution

The correct option is Option : 5

Out of 5 options above , purchase of new fixed assets, payment of dividend, repurchase of outstanding common stock and decrease in long term debt result in outflow of cash.

However, Decrease in Inventory is a result of increase in sales. Hence it is a source of cash because the money that was tied up in inventory has been released, provided that sales has not been made on credit basis.

jeff jeffy answered 1 year ago

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