Table 1 provides projected financial statement values for Firm X (a firm that you work for...

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Finance

Table 1 provides projected financial statement values for Firm X(a firm that you work for as a treasury analyst). Calculate thechange in operating cash flow that would result if managementimplemented the strategic and operational tactics needed to achievethe best in industry target values for the given operating workingcapital accounts. Discuss why operating cash flow wouldincrease.
Table 1
Firm X: Projected Value for Next Year
Best in Industry: Targets for Next Year
Accounts Receivable as a % of Revenues
15%
10%
Inventory as a % of Revenues
15%
10%
Accounts Payable as a % of Revenues
15%
20%
Revenues
$210M
$350M
Depreciation Expense
$15M
n/a
Net Income
$55M
$90M

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3.7 Ratings (647 Votes)

Particulars Projected for next year Best in industry Target Difference Accounts receivable 15 of 210M 315M 10 OF 350M 35M 35M315M 35M Inventory 15 of 210M 315M 10 OF 350M 35M 35M315M 35M See Answer

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Table 1 provides projected financial statement values for Firm X(a firm that you work for as a treasury analyst). Calculate thechange in operating cash flow that would result if managementimplemented the strategic and operational tactics needed to achievethe best in industry target values for the given operating workingcapital accounts. Discuss why operating cash flow wouldincrease.Table 1Firm X: Projected Value for Next YearBest in Industry: Targets for Next YearAccounts Receivable as a % of Revenues15%10%Inventory as a % of Revenues15%10%Accounts Payable as a % of Revenues15%20%Revenues$210M$350MDepreciation Expense$15Mn/aNet Income$55M$90M

	Firm X: Projected Value for Next Year	Best in Industry: Targets for Next Year
Accounts Receivable as a % of Revenues	15%	10%
Inventory as a % of Revenues	15%	10%
Accounts Payable as a % of Revenues	15%	20%
Revenues	$210M	$350M
Depreciation Expense	$15M	n/a
Net Income	$55M	$90M