Understanding Cash Flow Statement Components

Hard Financial Statements Cash Flow Statement

XYZ Holdings, a diversified company, recently released its financial statements, including a cash flow statement for the year ending December 31, 2023. Among the reported figures were the following:

- Cash flows from operating activities: $150,000

- Cash flows from investing activities: -$50,000

- Cash flows from financing activities: $25,000

Which of the following statements regarding the cash flow statement is correct?

The cash flow statement indicates a net increase in cash of $125,000 for the year.

The cash flows from operating activities include both cash receipts and cash payments related to the company’s principal revenue-producing activities.

The cash flow from investing activities reflects cash spent on acquiring long-term assets only, not cash inflows from the sale of investments.

Hint

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