Explain how a company can have a net loss for a fiscal period but have a net increase in cash from operating a

Question

Explain how a company can have a net loss for a fiscal period but have a net increase in cash from operating activities.

Answer 1

net gain/loss is tied to inventory. if a company reduced their inventory by x amount, and increased their cash on hand by a smaller amount, the net change would be a loss, even though the company has more cash than the previous period. put another way, if a company stops ordering merchandise, at the end a period of time, it will have a lot of cash, but empty shelves. the company will have to use the cash to replenish its inventory or it will be out of business.

Answer 2

profit and loss and cash flow have nothing to do with the other, higher cash flow is caused by eitherr a decrease in inventory or a increase in sales eithe way it increase the inventory turn over which increases cash flow. profit and loss depends on sales and expenses. there can be hundreds of reason that expenses go up for example increase on heating and lighting costs. severance pay for terminated employee's, settlement of a law suit all of which would increase the cost of doing business, which decreases profitability for period. .

Answer 3

i dunno!.... but thats a good question, when you find out the answer let me know!