medium · Principles of Finance financial-statements-markets-wc

Which single explanation is most consistent with this pattern WITHOUT any accounting manipulation?

1. Rapid sales growth on credit is expanding receivables and inventory faster than payables, so working-capital investment consumes more cash than accrual earnings generate
2. The firm is capitalizing costs that should be expensed, which inflates net income while the corresponding cash outflows still hit the operating section directly
3. Heavy depreciation charges are steadily depressing reported net income, while the cash that depreciation represents has already flowed out through the operating section entirely
4. Aggressive revenue recognition is booking sales before the cash is actually collected, which by itself makes both net income and cash flow from operations move in tandem together

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