Which one of the following statements related to the cash flow to creditors is correct? A. If the cash flow to creditors is positive then the firm must have borrowed more money than it repaid.
B. If the cash flow to creditors is negative then the firm must have a negative cash flow from assets.
C. A positive cash flow to creditors represents a net cash outflow from the firm.
D. A positive cash flow to creditors means that a firm has increased its long-term debt.
E. If the cash flow to creditors is zero, then a firm has no long-term debt

Option C. A positive cash flow to creditors represents a net cash outflow from the firm.

Explanation:

Cash flow is simply defined as The difference realised or gotten between the number of dollars that came in and out of the company. Cash is realised or generated by firm through activities and it is either paid to creditors or paid out to owners of Firm.

Cash flow to creditors simply connote the net payments to creditors and owners during year. Often called Cash Flow to Bondholders

Mathematically, Cash Flow to Creditors = Interest - (Long Term Debt of Current Year - Long Term Debt of Previous Year).

A positive cash flow shows that cash has enter into the company thereby increasing the asset levels.

Cash flow to creditors covers the amount of profit that a company pays to the debt holders in the space of an accounting term or period.