What is a possible impact of a significant capital expenditure on cash flow?

A significant capital expenditure typically involves substantial investment in long-term assets, such as property, equipment, or technology. When a business makes such investments, it often results in an immediate outflow of cash, which can lead to a decrease in cash flow for that period. This outflow occurs because the cash spent does not immediately generate income, whereas operational costs directly tied to revenue generation continue during the investment phase.

In addition, while capital expenditures can lead to increased efficiency or productivity in the long run, the initial impact on cash flow is generally negative due to the cash outlay necessary for the investment. This initial phase can put a strain on available cash flow until the benefits of the expenditure begin to materialize, affecting the company's liquidity in the short term.

The other options presented—such as an increase in cash, a decrease in operating expenses, or a reduction in working capital—do not accurately reflect the typical effects of significant capital expenditures in the short term, as these expenditures tend to lead to reduced cash flow instead.