Company A reports sales of $100,000 and net income of $15,000. Company

Company A reports sales of $100,000 and net income of $15,000. Company B reports sales of
$100,000 and net income of $10,000. Therefore

A) Company B is creating less value for its shareholders than Company A.
B) Company A’s cash flow may be higher or lower than Company B’s cash flow even though A’s
net income is higher.
C) Company A’s cash flow is $5,000 more than Company B’s cash flow.
D) Company B’s accounts receivable must be higher than Company A’s accounts receivable.

ANSWER

B