1. Negative Trends

Explain how the Inventory (#2) accounts reduced year to year cash balances and what can be done to correct the situation in the upcoming year.

Also comment on the concept applicable to the accounts; as underlined.

• Build up of Inventory and the impact on year to year changes in cash and discussion on Economic Order Quantity for Inventory management

• You built up/have more inventory on hand in 2017.

XYZ Bank told Bob to increase cash to $70,000 from 2016 to 2017. But cash increased from $16,566 in 2016 to just $33,411 in 2017, well short of $70,000. In this Assignment you will review six select changes in Balance Sheet accounts, highlighted in yellow, to better understand how these individual account changes impact overall cash flows. 2017 and 2016 Comparative Balance Sheets ASSETS 2017 2016 Items 1 to 6. Note the value effect on Cash. Did the change in balances from one year to the next create (+) or 'use' (-) cash? Note the accounting or finance issue related to each of the six accounts reviewed Cash S S 33,411 $ $16,566 S 260,205 318,768 Accounts Receivable s 1 1. You collected outstanding Accounts Receivable (quickly) 1. Explain 2/10 net 30 payment terms and how these terms may enhance collections Inventory 423,819 S 352,740 2 2.You built up/have more inventory on hand in 2017 2. Explain Economic Order Quantity (EOQ). (11,339) (40.700) Other current assets Total Current Assets $ S 41.251 758,686 $ $ 29.912 $ 717.986 5 3.You made a down payment for PP&E in 2017 to secure favorable financing and the benefits of first year of accelerated depreciation. Plant Property and Equipment $ 1.512.675 $ 1.403,220 $ S Goodwill and other assets Total Assets LIABILITIES AND EQUITY 382.145 2.653.506 $ 412 565 $ $ 2.533.771 3. Explain Modified Accelerated Cost Recovery System tax basis and how depreciation affects cash flows. 30.420 (119,735) Accounts Payable $ 378,236 $ 332,004 4. You owe suppliers balances at 90 days + past due for contract work. 4. What is the purpose of a Mechanics Lien for vendors demanding payment? Wages Payable Accrued income taxes Total Current Liabilities S 14.487 5 7,862 $ 21.125 $ 16,815 $ S S 413,848 $ $ 356,681 $ 5. What is the Accrual Accounting concept and the reporting of Wages 5 Payable? How is cash impacted? 4310 57.167 Long-Term Debt: Bank Notes A balloon payment was due; explain the 'downside' of these types of 6 loans 679.981 $ 793515 Total Liabilities Total Common Equity Total Liabilities and Equity $1,093,829 S 1,559,677 S 2.653,506 $ 1,150.196 $ 1,383,575 2.533.771 6. Explain the relationship between the collateral position of the bank and Ucci filing, 57,173 176,102 119.735 Your Team will...prepare a summary conclusion will briefly explain to Bob the two most important strategies he should employ to realize improved cash flow trends. XYZ Bank told Bob to increase cash to $70,000 from 2016 to 2017. But cash increased from $16,566 in 2016 to just $33,411 in 2017, well short of $70,000. In this Assignment you will review six select changes in Balance Sheet accounts, highlighted in yellow, to better understand how these individual account changes impact overall cash flows. 2017 and 2016 Comparative Balance Sheets ASSETS 2017 2016 Items 1 to 6. Note the value effect on Cash. Did the change in balances from one year to the next create (+) or 'use' (-) cash? Note the accounting or finance issue related to each of the six accounts reviewed Cash S S 33,411 $ $16,566 S 260,205 318,768 Accounts Receivable s 1 1. You collected outstanding Accounts Receivable (quickly) 1. Explain 2/10 net 30 payment terms and how these terms may enhance collections Inventory 423,819 S 352,740 2 2.You built up/have more inventory on hand in 2017 2. Explain Economic Order Quantity (EOQ). (11,339) (40.700) Other current assets Total Current Assets $ S 41.251 758,686 $ $ 29.912 $ 717.986 5 3.You made a down payment for PP&E in 2017 to secure favorable financing and the benefits of first year of accelerated depreciation. Plant Property and Equipment $ 1.512.675 $ 1.403,220 $ S Goodwill and other assets Total Assets LIABILITIES AND EQUITY 382.145 2.653.506 $ 412 565 $ $ 2.533.771 3. Explain Modified Accelerated Cost Recovery System tax basis and how depreciation affects cash flows. 30.420 (119,735) Accounts Payable $ 378,236 $ 332,004 4. You owe suppliers balances at 90 days + past due for contract work. 4. What is the purpose of a Mechanics Lien for vendors demanding payment? Wages Payable Accrued income taxes Total Current Liabilities S 14.487 5 7,862 $ 21.125 $ 16,815 $ S S 413,848 $ $ 356,681 $ 5. What is the Accrual Accounting concept and the reporting of Wages 5 Payable? How is cash impacted? 4310 57.167 Long-Term Debt: Bank Notes A balloon payment was due; explain the 'downside' of these types of 6 loans 679.981 $ 793515 Total Liabilities Total Common Equity Total Liabilities and Equity $1,093,829 S 1,559,677 S 2.653,506 $ 1,150.196 $ 1,383,575 2.533.771 6. Explain the relationship between the collateral position of the bank and Ucci filing, 57,173 176,102 119.735 Your Team will...prepare a summary conclusion will briefly explain to Bob the two most important strategies he should employ to realize improved cash flow trends