The problem does not provide this information. The increase in accounts receivable is consistent with recording an unusually high level of sales at the end of Year 7, which did occur. The large increase in inventories also might indicate that the firm did not recognize an appropriate amount for cost of goods sold for the sales revenue recognized early. An examination of the gross margin for Year 7 compared to Year 6 might provide evidence of an understatement of cost of goods sold for Year 7. In addition, one would expect that an increase in inventories would result in a similar increase in accounts payable to suppliers. Accounts payable actually declined during Year 7, perhaps indicating an unwillingness on the part of suppliers to extend credit. Sunbeam reduced its capital expenditures still further during Year 7 and sold off businesses to generate cash. Moreover, it continued to engage in short-term borrowing. I appreciate your careful review, Pam! You consistently beat us all in our race to comment, as well. How shoudl i respond to this in simple