C2-2 (Negative cashflows, positive net income, and dividends) 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 dividend to its stock¬ holders of $2.56 per share. REQUIRED:

a. Briefly explain how a company could have negative cash flow from operating activities, positive net income, and still pay dividends.

b. Could a company continue such a strategy over an extended period of time? Why or why not?