A&D Inc. is projecting the following increases and decreases over the next year: Inventory - increase...
A&D Inc. is projecting the following increases and decreases over the next year: Inventory
- increase by $3 million Accounts receivable
- decrease by $2 million Accrued payroll taxes
- increase by $1 million Fixed assets
- increase by $5 million Long term debt
- increase by $4 million Revenues
- increase by $6 million As a result of its projections,
A&D Inc. can expect it's net working capital to:
a. increase by $7 million
b. Increase by $1 million.
c. Decrease by $1 million
d. Not change.
Homework Answers
| d. Not change. | |
| Statement showing Computations | |
| Particulars | Impact on WC |
| Inventory - increase by $3 million | 3,000,000.00 |
| Accounts receivable - decrease by $2 million | (2,000,000.00) |
| Accrued payroll taxes- increase by $1 million | (1,000,000.00) |
| As a result of its projections, A&D Inc. can expect it's net working capital to d. Not change. | - |
| Fixed
assets increase by $5 million Long term debt increase by $4 million and Revenues increase by $6 million do not impact working capital |
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