Question: Owners of a business are contemplating investing 550 000 in non current

Owners of a business are contemplating investing $550,000 in non-current assets in early January 2014. They are exploring ways to finance it. In 2012, the company had $250,000 in trade receivables, an amount that it expects will increase to $275,000 in 2013. The inventory level for 2012 was $430,000 and, having introduced a new inventory management system, the owners expect to be more efficient in managing it. They forecast a level of $370,000 in inventories by the end of 2013. They expect a substantial increase in revenue, which will increase their profit from $150,000 in 2012 to $230,000 in 2013.

1. How much cash will be generated from internal operations by the end of 2013?
2. Will the owners have to borrow from investors to finance the expansion? If yes, how much?

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  • CreatedDecember 03, 2014
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