Question 11 of 30 Which one of the following will decrease t

Question 11 (of 30) Which one of the following will decrease the cash flow to creditors, all else equal? O Increase in long-term liabilities. O Decrease in dividends paid. Increase in current liabilities O Decrease in cash flow to stockholders Increase in the interest paid. Previous attempt

Solution

Answer: Increase in long term liabilities. Explanation: Cash flow to creditors = Interest Expense +(Beginning long term debt- Ending Long-term Debt). For the cash flow to creditors to decrease, the Ending long term debt should be more then the beginning long term debt. Hence, increase in long term liabilities will decrease cash flow to creditors. Other options: Dividends do not affect creditors. Current liabilities are not included in creditors Cash flow to stockholders is not relevant