Question
Why can positive CFI from asset sales be a red flag rather than a strength?
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Answer
It may reflect asset liquidation instead of productive reinvestment.
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Question
Under the indirect CFO method, why is a gain on asset sale subtracted from CFO?
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Answer
Because it is non-operating; the cash proceeds belong in CFI.
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Question
Why is persistent net income above CFO a cash flow red flag?
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Answer
It suggests earnings rely heavily on accruals, not cash generation.
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Question
If a firm's CFO is consistently lower than net income, what does that imply about the CFO-to-net-income profile?
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Answer
Weak cash earnings quality; the ratio is likely below a healthy level.
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