Which source of cash is the best indicator of a firm's viability as an ongoing concern?

Cash from operating activities is the best indicator of a firm's long-term viability because it reflects the cash generated from its core, day-to-day business operations, such as selling goods or providing services. A company that consistently generates positive cash flow from operations can fund its working capital, make capital expenditures, and pay dividends without relying on external financing or selling off its long-term assets. Sustainable positive operating cash flow demonstrates a healthy, self-sufficient business model, which is the essence of being an ongoing concern.

B. Relying on financing activities (debt or equity) is not sustainable for funding daily operations and may indicate financial distress.

C. Cash from selling assets (investing activities) is a finite source and not part of a company's primary business model.

D. "Production activities" is not a standard classification on the statement of cash flows; these costs are part of operating activities.

1. Bodie, Z., Kane, A., & Marcus, A. J. (2018). Investments (11th ed.). Chapter 18, "Financial Statement Analysis," Section on "The Statement of Cash Flows" (p. 599). McGraw-Hill Education.

2. White, G. I., Sondhi, A. C., & Fried, D. (2003). The Analysis and Use of Financial Statements (3rd ed.). Chapter 4, "Analysis of Cash Flows," Section on "Cash from Operations" (p. 161). John Wiley & Sons.

3. MIT Sloan School of Management. (2004). 15.511 Financial Accounting, Lecture Notes, Lecture 11: Statement of Cash Flows. MIT OpenCourseWare. Retrieved from https://ocw.mit.edu/courses/15-511-financial-accounting-summer-2004/resources/lec11/