For over a year, Center Energy Corporation, a utility company in Ohio, had negative cash flow from

Question:

For over a year, Center Energy Corporation, a utility company in Ohio, had negative cash flow from operating activities, caused primarily by the escalating costs of one of its nuclear plants outside Cleveland. Yet the company reported positive earnings and paid a to its shareholders of $2.56 per share.
REQUIRED:
a. Briefly explain how a company could have negative cash flow from operating activities, have a positive net income, and still pay dividends.
b. Could a company continue such a strategy over an extended period? Why or why not?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...