Impact of Inventory Increase on Cash Flow

Easy Financial Statements Cash Flow Statement

Consider the cash flow statement of a manufacturing company for the year ended December 31, 2022. The company reported a significant increase in its inventory levels compared to the previous year. In assessing the cash flow statement, which of the following statements describes the impact of an increase in inventory on the cash flow from operating activities?

An increase in inventory decreases cash flow from operating activities.

An increase in inventory does not affect cash flow from operating activities.

An increase in inventory increases cash flow from operating activities.

Hint

Submitted2.1K

Correct2.0K

% Correct92%