Table 1 provides projected financial statement values for Firm X (a firm that you work for as a treasury analyst). Calculate the change in operating cash flow that would result if management implemented the strategic and operational tactics needed to achieve the best in industry target values for the given operating working capital accounts. Discuss why operating cash flow would increase.

Table 1

	Firm X: Projected Value for Next Year	Best in Industry: Targets for Next Year
Accounts Receivable as a % of Revenues	15%	10%
Inventory as a % of Revenues	15%	10%
Accounts Payable as a % of Revenues	15%	20%
Revenues	$210M	$350M
Depreciation Expense	$15M	n/a
Net Income	$55M	$90M