1. Working Capital Management. Indicate how each of the following six different transactions that Dynamic Mattress might make would affect (i) cash and (ii) net working capital:
a. Paying out a million cash dividend. ivermectin 100ml
b. A customer paying a $2,500 bill resulting from a previous sale.
c. Paying $5,000 previously owed to one of its suppliers.
d. Borrowing $1 million long-term and investing the proceeds in inventory.
e. Borrowing $1 million short-term and investing the proceeds in inventory.
f. Selling million of marketable securities for cash. ivermectin pharmacology
3. Sources and Uses of Cash. State how each of the following events would affect the firm’s balance sheet. State whether each change is a source or use of cash.
a. An automobile manufacturer increases production in response to a forecast increase in demand. ivermectin wurmkur Unfortunately, the demand does not increase.
b. Competition forces the firm to give customers more time to pay for their purchases.
c. The firm sells a parcel of land for $100,000. The land was purchased 5 years earlier for $200,000.
d. The firm repurchases its own common stock.
e. The firm pays its quarterly dividend.
f. The firm issues $1 million of long-term debt and uses the proceeds to repay a short-term bank loan.
5. Managing Working Capital. A new computer system allows your firm to more accurately monitor inventory and anticipate future inventory shortfalls. As a result, the firm feels more able to pare down its inventory levels. What effect will the new system have on working capital and on the cash conversion cycle?
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