Tacky Textiles buys some inventory from Calvin Klein in 2021 for $731,000 on credit terms and will pay for the inventory in 2022. In 2021 Tacky Textiles sells $413,000 of the inventory to The Bay for $652,000. The Bay will pay Tacky Textiles in 2023. (You do not need to show all financial statements.). 

Indicate the cash flows caused by the above transactions. (Be specific in terms of years too - show numbers for each of the three years and indicate whether the cash flow for the year is positive, negative, or zero.) Use the following table to answer:

Year	2021	2022	2023
Cash flow

 

 Assume without these transactions, inventory accounts each year would be zero. Indicate the balances in inventory accounts caused by the above transactions. (Be specific in terms of each year too - show numbers for each of the three years even if zero.) Use the following table to answer:

End of Year	2021	2022	2023
Inventory Balance

 

Indicate the effects on profitability (from an accounting point of view, ignore taxes) caused by the above transactions. Assume that without these transactions, profit each year would be zero. (Be specific in terms of years too - show numbers for each of the three years - even if zero.) Use the following table to answer:

Year	2021	2022	2023
Profit

 

4.Do the cash flow numbers give the same indication of performance for Tacky Textiles as the profitability numbers? Consider if you had to calculate the NPV with only the data given so far and some positive interest rate (say 10%). Explain briefly.

Answer rating: 100% (QA)

Cash Flows Year 2021 Tacky Textiles receives 731000 from Calvin Klein for inventory purchased 731000 positive cash flow Tacky Textiles pays out 413000 ... View the full answer