Answer to Question #293085 in Management for patricia connor

Question

Josh and Amy are finance trainees at a company which has been reporting a positive cash flow for the last 5 years. Both Josh and Amy have learned in their finance courses at the university that “cash is king” and is more important than reported profits by a company. Guided by this knowledge, none of them feels a need to review the company’s cash flow pattern over time. Are they necessarily correct in their understanding about a firm’s long-term cash flow situation?

 

Answer 1

Cash in circulation is on the rise. The demand for currency, which has seen a steady surge in the recent past months. It has once again proved that cash is king. It is also a proof that it will remain relevant moving forward, and crucial in the firm’s long-term cash flow situation.