Which of the following is/are true?
I. An increase in inventories has a positive impact on cash flows.
II. An increase in receivables has a negative impact on cash flows.
III. Deferred taxes increase current cash balance.
IV. Utilization of tax loss carry-forwards has a positive impact on cash flows.
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A. B. C. D.D
An increase in inventories implies cash was spent to obtain more goods than were sold. An increase in receivables implies part of the sales were made on credit, not a cash basis. Deferring taxes implies some of the cash expense was delayed into the future, increasing the current cash balance. Utilization of taxloss carry- forwards implies a reduction in the taxable income by the amount of the carry-forward. This reduces cash expense on taxes.