What typically happens to operating cash flow during a decrease in sales?

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When sales decrease, operating cash flow generally decreases as well. This occurs because cash flow from operations is closely tied to sales levels; as sales decline, the revenue generated by the business falls, leading to lower cash inflows. Additionally, operating expenses may not decrease at the same rate as sales, further putting pressure on cash flow. Fixed costs remain constant regardless of sales volume, and variable costs may not proportionately decline, leading to a reduction in net cash flow.

In summary, a decrease in sales leads directly to reduced cash inflows, which contributes to a decline in operating cash flow, making it the most accurate choice in this context.

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