During a meeting of the management committee of Edsel Corporation, a number of proposals are made to alleviate its weak cash position and improve income. Evaluate and comment on both the immediate and long-term effects of the following proposals on the measures indicated. Indicate increase (+), decrease (–), or no effect(NE).

 

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EFFECT ON Cash from Cash Proposal Net Income Operations Position 1. Substitute stock dividends for cash dividends. 2. Delay needed capital expenditures. 3. Reduce repair and maintenance outlays. 4. Increase the provision for depreciation: a. For GAAP books only. b. For tax only. C. For both GAAP books and tax. 5. Require earlier payment from clients. 6. Delay payment to suppliers and pass up cash discounts. 7. Borrow money short term. 8. Switch from sum-of-the-years'-digits to straight-line depreciation for books only. 9. Pressure dealers to buy more. 10. Reduce funding of pension plan to the minimum legal level. 11. Reduce inventories by implementing a just-in-time inventory system. 12. Sell trading securities that have declined by $1,000 in the current period but are still valued at $3,000 above cost. 13. Reissue treasury shares. EFFECT ON Cash from Cash Proposal Net Income Operations Position 1. Substitute stock dividends for cash dividends. 2. Delay needed capital expenditures. 3. Reduce repair and maintenance outlays. 4. Increase the provision for depreciation: a. For GAAP books only. b. For tax only. C. For both GAAP books and tax. 5. Require earlier payment from clients. 6. Delay payment to suppliers and pass up cash discounts. 7. Borrow money short term. 8. Switch from sum-of-the-years'-digits to straight-line depreciation for books only. 9. Pressure dealers to buy more. 10. Reduce funding of pension plan to the minimum legal level. 11. Reduce inventories by implementing a just-in-time inventory system. 12. Sell trading securities that have declined by $1,000 in the current period but are still valued at $3,000 above cost. 13. Reissue treasury shares.