COMMERCIAL BANK PRACTICE & POLICY QUESTION. PLEASE SHOW WORK 1. In each of the f

Question

COMMERCIAL BANK PRACTICE & POLICY QUESTION. PLEASE SHOW WORK

1. In each of the following cases, indicate whether the item noted will increase, decrease or not affect a firm’s cash flow from operations. Provide your reasoning.

a.        Accounts payable fall from $73,900 to $46,400

b.        Prepaid expenses fall from $22,400 to $11,700

a.        Accounts receivable rise from $115,000 to $418,200

2.   A firm is reporting net income that is increasingly rising each year, but is experiencing negative cash flow from operations. Provide two reasons why this might be the case and explain each.

3. In a FLAT sales environment, how is a Bank Loan repaid? What is the source of repayment?

Explanation / Answer

1.

a.        Accounts payable fall from $73,900 to $46,400 ( decrease the cash flow from operations because decline in accounts payble means cash has gone out to suppliers , so woking capital has increased resulting in decline in cash flow from operations)

b.  Prepaid expenses fall from $22,400 to $11,700 ( increase the cash flow from operations because decline in prepaid expenses means that the company has recognized these costs now in profits however these were paid earlier, so woking capital has decreased resulting in increase in cash flow from operations)

c.Accounts receivable rise from $115,000 to $418,200 (decrease the cash flow from operations because rise in Accounts receivable means cash is pending with customers , so woking capital has increased resulting in decline in cash flow from operations)

the above are answers

we do only one question based on Chegg rule.

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