If net cash flow is positive, what does this indicate about cash inflows versus cash outflows?

• A. Cash Balance Is Zero
• B. Cash Inflows Exceed Cash Outflows
• C. Cash Outflows Exceed Inflows
• D. New Financing Is Required

Answer: (B)

Net cash flow shows whether cash coming in exceeds cash going out over a period. If it’s positive, cash inflows are larger than cash outflows, meaning more cash is entering than leaving. This increases the cash balance and overall liquidity, helping meet obligations or fund opportunities. The other ideas don’t fit because a zero cash balance would occur only if inflows and outflows exactly matched, not when inflows exceed outflows; if outflows exceeded inflows, the net cash flow would be negative; financing needs aren’t determined by a positive net cash flow in itself, since positive cash flow indicates there isn’t an immediate shortfall.