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If you want to invest in a company and you noticed that the company’s free cash...

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Finance

If you want to invest in a company and you noticed that thecompany’s free cash flow or operating cash flow from its assets wasnegative for the past 3 years, what do you think could be thecause, and how can the company survived for so long time withnegative cash flows. Would you invest in this company? Why?

Answer & Explanation Solved by verified expert
3.8 Ratings (554 Votes)
A negative operating cash flow is a can be due to the fact that the company is purchasing higher stock and has given a longer credit period for receivables Also the reasons can include that    See Answer
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Transcribed Image Text

If you want to invest in a company and you noticed that thecompany’s free cash flow or operating cash flow from its assets wasnegative for the past 3 years, what do you think could be thecause, and how can the company survived for so long time withnegative cash flows. Would you invest in this company? Why?

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