Question

Drawing from your professional or personal experience, or from your research skills (researching news articles or publicly traded companies' corporate annual reports), explain a situation in which a profitable organization had negative cash flows or when an organization experiencing a loss had positive cash flow.

Answer 1

Solution-
Cash flow is reported on the cash flow statement,which shows where cash is received and spent,In better terms,Cash Flow is a statement which shows the net amount of cash and cash equivalents transacted in and out of the company.So if a company shows positive cash flow ,it means the company's liquid assets are increasing.
For example- If the Negative net income of ABC company for the year is $50 milion,but the positive cash is $120 million.
($ in millions)
Cash flow from operating activities
ABC Co.
Cash flow statement as of december 31,2020

Net income(loss)	$(50)
Cash and cash equivalent at the end of the period	$120

The factors affecting this situation can be-
1)Depreciation- It is the method that allocates the cost of fixed asset over a period of time.So net income is calculated by deducting a company's expenses and depreciation is one of those,if a company has a net loss for the period ,that could be a huge amount of depreciation expense which is added back into cash flow which results in positive cash flow ,while simultaneously recording a loss for the period.
2)Sale of an asset - If a co.sells an asset to raise capital ,therefore addition of sale of an asset could be another factor.The company could result net loss while having positive cash flow,from the  sale of an asset, if the asset's value exceeds the loss for the period.
3)Accrued Expenses- Accrued expenses occur when a comapny records an expense for purchasing an asset,but does not have to pay it,expenses are recorded at the time they are incurred not when they are paid.Suppose a ABC co. has substantial expense in Q4 ,but does not have a cash outlay until next year when the invoice is paid,so it can result in negative loss while being in positive cash position.