MCC is having a bad year. Net income is only 37,000. Also, two important overseas customers are
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MCC is having a bad year. Net income is only 37,000. Also, two important overseas customers are falling behind in their payments to MCC, and MCC’s account receivables are ballooning. The company desperately needs a loan. The board of directors is considering ways to put the best face on the company’s financial statements. MCC’s bank closely examines cash flow from operations. DP, MCC’s controller, suggests classifying as long-term receivables from slow-paying clients. He explains to the board that removing the 80,000rise in accounts receivable from current assets will increase net cash provided by operations. This approach may help MCC get the loan.
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