If sales drop by 20%, what do you think will happen to COGS? So how would this one item affect net cash flows from operations? If the A/R collection period increases by 30 days, approximately how much cash will that cost the firm (hint: sales/12 is a good guess for a month's worth of A/R)?

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If sales drop by 20 COGS may decrease proportionally if production scales down ... View the full answer