Janice Leo is the head of bond valuation at UMB Investments Management LLC. She has been very frustrated by the number of investment analysts who seem to have a little understanding of financial statement analysis and corporate finance concepts. She has written a set of conceptual questions and simple problems to screen for the better candidates in the applicant pool. A few of the questions related to cash flow statements, present value, future value and problems are given below:

In response to a few question regarding cash flow statements Mike Grillo, one of the analysts at UMB Investments made the following statements.

Statement 1 - Positive operating cash flow cannot be generated when earnings are negative.

Statement 2 - A firm must be profitable in order to generate sustainable cash flow.

Statement 3 The cash effects of decreasing accounts payable turnover are unlimited.

Statement 4 Cash flows are generally considered more sustainable if they are generated by investing and financing activities.

Grillos statement 4 is correct with respect to

A. Financing only

B. Investing only

C. Neither for investing nor for financing