Question

A company has positive cash flows from operating activities, negative cash flows from capital expenditures, and negative cash flows from dividends. This company is most likely in which phase of the corporate life cycle

Answer 1

Growth stage. Profits from the company should be able to comfortably cover overhead and pay employees at this point. Sales are probably rising, and profit margins have risen once capital investments and loans have been repaid by the business.

What these terms means?

A) Positive cash flow

B) Negative cash flow

C) Dividends

• The net amount of cash and cash equivalents coming into and going out of a business is referred to as cash flow.
• Money spent and money received represent inflows and outflows, respectively. Fundamentally, a company's capacity to produce positive cash flows, or more specifically, its capacity to maximize long-term free cash flow, determines its ability to create value for shareholders (FCF).
• When a company has positive cash flow, its net balance on its cash flow statement for that particular period is higher than zero. In other words, the net result of all cash inflows and outflows over this period is positive rather than negative, and as a result, the company's cash reserves are increasing.
• Because a capital expenditure involves money leaving your company, it has a negative value in comparison to income or revenue. Because they are being deducted from your balance sheet or show as a negative capital expenditure on cash flow statements, capital expenditures are negative.
• a sum of money that is regularly paid by a business to its shareholders out of its profits (typically once per year) (or reserves) is called Dividends.

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