For each scenario below calculate the impact on cash, availability and net liquidity (cash + availability) Eligible AR of $100 is collected Raw material of $80 is received, eligible AR of $50 is collected Inventory of $100 is sold for $200 Raw material of $100 is received, raw material of $200 is converted to finished goods, finished goods of $50 is sold for $100, eligible invoices of $50 are collected Ineligible AR of $1,000 is collected, rawmaterial of $800 is procured, raw material of $500 is converted to finished goods Assumptions: AR advance rate 85% Inventory advance rates: raw material - 25%, finished goods - 50% Ineligible AR consists of invoices aged over 90 days Company has terms with vendors - no cash is due to vendors upon receipt of raw materials

Answer rating: 100% (QA)

To calculate the impact on cash availability and net liquidity for each scenario we need to consider the changes in each component based on the transa... View the full answer