1. Understand the reporting effect: Calculate operating cash flows using financial statements provided by Larry.

2. Specify the options: Calcualte operating cash flows without the two assumptions made by Larry.

3. Identify the impact: Could Larry's assumptions affect Matt's decision for the bank to lend an additional $100,000 to Larry?

4. Make decisions: Should Matt use Larry's assumption in analyzing the loan for Aggressive Corporation?

Ethics which fust completed its first year of operetsons. The application included the following firsicial statements. 1 iscatement of Cosh Fbms Matt notices that the company has no ending accounts receivable and no ending inventory, wich serms suspicious, Matt is also wondering Why a compary with $150,000 in cash is setking an additional $100,000 in borrowing Seeing Matt's hesitation, Larry Bling, the CFO of Ageressive Corporation, eloses the cutference room doot. He shares with Matt the following additional information: - The ending accounts receivable balance is actually $00,000, but becuuse those accounts are expected to be collected very soon 1 assumed a bolance of $0 and counted those receivables as cash collected. - The ending inventory balance is actually $40,000, but I believe that inventory can easily be sold for $75,000 in the near future. So, I included sales revenue of $75,000 (and cost of goods of $40,000 ) in the income statement and cash collected of $75,000 (and no inventory) in the balance sheet. Plus, Larry tells Matt that he'll be looking for a new CFO in another year to run Aggressive Corporation, along with his other businesses, and Matt is just the kind of guy he is looking for. Larry mentions that as CFO, Matt would receive a significant salary. Matt is flattered and says he will look over the loan application and get back to Larry concerning the additional $100,000 loan by the end of the week. Required: 1. Understand the reporting effect: Calculate operating cash flows using the financial statements provided by Larry. 2. Specify the options: Calculate operating cash flows without the two assumptions made by Larry. 3. Identify the impact: Could Larry's assumptions affect Matt's decision for the bank to lend an additional $100,000 to Larry? 4. Make a decision: Should Matt use Larry's assumption in analyzing the loan for Aggressive Corporation