QUESTION 16 OF 28

Have you ever run into a situation where a company had a positive cash flow but was still in critical financial trouble?

At the heart of this question, your interviewer is looking to dive in and take a look at your critical thinking skills. While positive cash flow is usually a very good sign of a company's overall ability to settle its debts and handle future financial challenges, there are some situations where all isn't as it seems when looking at a company with a positive cash flow. Whether you have run into this situation or not, it is important for you to point out that you are aware of situations where a positive cash flow can be misleading.

"If hired for this position, you can rest assured that I know all considerations necessary when looking at cash flow for an organization when determining their overall financial health. A cash flow statement can often show positive cash flow when they take on new cash from loans or long-term debt. While these items do show up as positive on the cash flow, they don't accurately reflect the profitability of the organization."

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Federal Reserve Bank of New York Mock Interview

Have you ever run into a situation where a company had a positive cash flow but was still in critical financial trouble?

Unlock all 28 The Federal Reserve Bank of New York questions

28 The Federal Reserve Bank of New York Interview Questions & Answers