In: Finance
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. |
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.