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    Operating Cash Flow and Net Working Capital

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    Please help answer the following questions:

    1) Operating Cash Flow. Suppose a company's operating cash flow was negative for several years running. Is this necessarily a good sign or a bad sign?

    2) Net Working Capital and Capital Spending. Could a company's change in NWC be negative in a given year? (Hint: Yes.) Explain how this might come about. What about net capital spending?

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    https://brainmass.com/business/working-capital-management/operating-cash-flow-and-net-working-capital-541152

    Solution Preview

    1) Operating Cash Flow. Suppose a company's operating cash flow was negative for several years running. Is this necessarily a good sign or a bad sign?

    "Cash flow from operating activities is a section of the cash flow statement that provides information regarding the cash-generating abilities of a company's core activities. "1Operating cash flow represents the efficiency of the operations. If the organization is having higher operating cash flow then it indicates better ...

    Solution Summary

    This solution identifies net working capital and capital spending. It also discusses a negative change in a company's NWC. The answers are provided in 277 words.

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