Question

A large NBFC reported an increase in operating profit

Q: Answer-A large NBFC reported an increase in operating profit over the last year. However, its cash flow fro...

The Cash Flow Statement reveals actual cash movement and highlights discrepancies between accounting profit and real liquidity, exposing operational stress not visible in profit figures.

over the last year. However, its cash flow from operations was negative due to a sharp rise in receivables and a decrease in payables. Analysts are questioning the firm’s liquidity and sustainability. Which tool would be most relevant in identifying such a red flag?

A Comparative Balance Sheet

B Common Size Statement

C Fund Flow Analysis

D Cash Flow Statement

E Trial Balance

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A large NBFC reported an increase in operating profit

Solution