Question
A company has the following cash flows:
Cash from operations (30)
Cash from investing activities (45)
Cash from financing activities 90
Which growth stage best describes this pattern of cash flows?
Fossilized
Decline
Early growth
Start-up
Mature
1 point
4.
Question 4
A company
Cash from operations (30)
Cash from investing activities (45)
Cash from financing activities 90
Which growth stage best describes this pattern of cash flows?
Fossilized
Decline
Early growth
Start-up
Mature
1 point
4.
Question 4
A company
Answers
GPT-4o mini
To analyze the cash flows:
1. **Cash from operations**: -30 (negative cash flow indicates that the company is not generating enough cash from its core business operations).
2. **Cash from investing activities**: -45 (negative investment cash flow suggests the company is investing heavily, likely in growth opportunities).
3. **Cash from financing activities**: +90 (positive cash flow from financing indicates the company is raising capital, possibly through debt or equity, to fund its operations or investments).
Based on this cash flow pattern:
- The **negative cash flow from operations** suggests the company is struggling to generate profit.
- The **negative cash flow from investing activities** often implies that the company is in a growth phase and is investing in assets for future growth.
- The **positive cash flow from financing activities** suggests the company is seeking external funding to support its operations and investments.
The combination of these factors points to the company being in the **Early Growth** stage. This stage typically involves heavy investment and capital raising while the company is not yet generating sufficient cash from operations.
Thus, the best growth stage that describes this pattern of cash flows is **Early Growth**.
1. **Cash from operations**: -30 (negative cash flow indicates that the company is not generating enough cash from its core business operations).
2. **Cash from investing activities**: -45 (negative investment cash flow suggests the company is investing heavily, likely in growth opportunities).
3. **Cash from financing activities**: +90 (positive cash flow from financing indicates the company is raising capital, possibly through debt or equity, to fund its operations or investments).
Based on this cash flow pattern:
- The **negative cash flow from operations** suggests the company is struggling to generate profit.
- The **negative cash flow from investing activities** often implies that the company is in a growth phase and is investing in assets for future growth.
- The **positive cash flow from financing activities** suggests the company is seeking external funding to support its operations and investments.
The combination of these factors points to the company being in the **Early Growth** stage. This stage typically involves heavy investment and capital raising while the company is not yet generating sufficient cash from operations.
Thus, the best growth stage that describes this pattern of cash flows is **Early Growth**.