How increases in accounts receivables and inventory balances

Assignment Help Taxation

Reference no: EM133472249

Case Scenario:

The CFO, Karl Richland, of Semtell Company in Cincinnati, Ohio, is asking for your advice. The CFO explains sales are increasing, but there is a constant matter of not having enough cash to meet payroll or pay vendors within 30 days.

Checklist: Using the information in the company's cash flow statement, prepare an informational business letter to the CFO explaining the seven items listed below. Note: There is no actual cash flow statement for you to look at, but you must write the letter based on your understanding of the cash flow statement and what represents the sources and uses of cash.

Explain why cash can go down even when sales are up.
Explain how increases in accounts receivables and inventory balances affect cash flows within a company.
Explain what effect increases or decreases in asset and liability accounts have on cash flow.
Explain how changes in accounts payable balances impact cash flows.
Recommend a possible solution for the company's shortage of working capital.
Your informational business letter should:
Use the accepted business letter format
Provide a clearly established and sustained viewpoint and purpose

Reference no: EM133472249

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