A profitable growing company shows negative net cash flow from operations on its direct cash flow statement, has invested in PPE, and shows an increase in short-term debt but no long-term debt. Which statement best describes this scenario?

• A. The company used short-term debt to finance its plant, property and equipment.
• B. Short-term debt was used to finance increase in working capital
• C. Profits were used to pay for both plant, property and equipment and working capital.
• D. Short-term debt financed the company's negative net cash after operations.

Answer: (B)