Firm has cash flow to creditors of negative

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Reference no: EM132015303

1. A firm has cash flow to creditors of negative $500 for the year 2014. Which of the following statements must be true?

A) The firm must not have paid off any existing debt over the year 2014.

B) The firm must not have any interest expense.

C) The firm must have borrowed money over the year 2014.

D) The firm's interest expense must be negative.

2. A firm has cash flow to shareholders of negative $1,000 for the year 2015. During the year 2015, the firm paid $200 in dividends and repurchased $100 of existing shares. Which of the following statements must be true?

A) The firm must have issued $1300 in new shares during 2015.

B) The firm must have issued $1100 in new shares

C) The firm must be in trouble.

D) The firm must have issued $700 in new shares.

Reference no: EM132015303

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