Floral Shoppes has a new project in mind that will increase the accounts receivable by $19000, decrease accounts payable by $400
0, increase fixed assets by $27000, and decrease inventory by $2000. What is the amount the firm should use as the initial cash flow attributable to net working capital when it analyzes this project?A. $25000B. $12000C. $17000D. $21000E. $52000
Calculation for the amount the firm should use as the initial cash flow attributable
Using this formula
Initial cash flow attributable to net working capital = Change in current assets - Change in current liabilities
Let plug in the formula
Initial cash flow attributable to net working capital=[(Increase in Account Receivable $19,000 + Decrease in inventory $2,000)] - ( Decrease accounts payable $4000)
Initial cash flow attributable to net working capital= (19,000 - 2,000) - [-4,000]
Initial cash flow attributable to net working capital=17,000 + 4000
Initial cash flow attributable to net working capital=$21,000
Therefore the amount the firm should use as the initial cash flow attributable to net working capital when it analyzes this project will be $21,000
The bonds in private placement can only be sold to the pre-selected investors and institutions.
The private placement means an private alternative to the process of issuing bonds which are previously publicly offered for the purpose of raising capital for the corporation.
The Private placement involves the offers or sales of debt/equity securities between the issuer and selected investors.
Therefore, in conclusion, the bonds in private placement can only be sold to the pre-selected investors and institutions.
The answer and procedures of the exercise are attached in the following archives.
Explanation
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
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