Is it possible for a company that has negative net income and ...

[FButt]

Is it possible for a company that has negative net income and negative operating cash flow to end the year with
  an increase in cash and an increase in stock price? Explain your answer.
 
  What will be an ideal response?

Question 2

Jennifer was just asked to serve on the Board of an insurance company. Jennifer is concerned that if the company is mismanaged, the policyowners, stockholders, and employees might sue the management team.
 
  What type of liability insurance will protect Jennifer from such claims if she accepts a position on the insurance company's Board?
  A) commercial general liability insurance
  B) employment-related practices liability insurance
  C) workers compensation and employer liability insurance
  D) directors and officers liability insurance

[Ahernandez18]

Answer to Question 1

Yes Many start-up companies or research companies in high growth industries are financed by borrowing money or
selling more shares of stock to cover operating losses and finance development costs until, hopefully, the companies
become profitable and cash-flow positive. Many of the familiar Internet companies of today, such as Amazon and
Yahoo, began with negative income and high negative operating cash flows as infrastructure and business
relationships were put into place. Investors are willing to provide capital to such companies hoping that business
growth will lead to positive and growing cash flows in the future. If financing cash flows are more than enough to
cover operating losses and additional investments in working capital and long-term assets, then the company's cash
balance could actually increase despite negative net income and negative operating cash flow.

Answer to Question 2

Answer: D