Consider the financial statements for Ace Inc. for questions 1 to 8: 1. Identify the sources of
Question:
Consider the financial statements for Ace Inc. for questions 1 to 8:
1. Identify the sources of cash and uses of cash for each year. Create a sources and uses statement.
2. Estimate the age of inventory for each year.
3. Estimate the age of accounts receivable for each year.
4. Estimate the age of accounts payable for each year.
5. Estimate the working capital gap for each year.
6. Suppose year 2's days of inventory were reduced to 35. How much cash would be freed up?
7. Suppose year 2's days of receivables were reduced to 35. How much cash would be freed up?
8. Suppose year 2's days of payables were increased to 40. How much cash would be freed up?
9. What are the three methods by which a firm can improve its working capital gap?
10. From a lender's (or an investor's) perspective, which is safer, and why: commercial paper or bankers acceptances?
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Step by Step Answer:
Financial Management Concepts and Applications
ISBN: 978-0132936644
1st edition
Authors: Stephen Foerster