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Chartered Financial Analyst Level 1

Chartered Financial Analyst Level 1

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For a mature company, the primary source of cash flows is most likely derived from:

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Explanation:

Explanation

For a mature company, it is expected and desirable that operating activities serve as the primary source of cash flows. Over the long term, a company must generate cash from its core operations to sustain its business. If operating cash flows were consistently negative, the company would need to rely on external financing (e.g., borrowing or issuing stock) to cover the shortfall. However, providers of capital eventually require repayment, which must come from operating activities. Therefore, operating activities are the most sustainable and reliable source of cash flows for a mature company.

Option B (Investing activities) is incorrect because while cash from operations can be used for investments, investing activities are not the primary source of cash flows for a mature company.

Option C (Financing activities) is incorrect because financing activities involve raising capital, which is not sustainable as a primary source of cash flows for a mature company.

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