Sources and uses of cash State whether each of the following events is a source or use of cash, or neither. a. An automobile manufacturer increases production in response to a forecasted increase in demand. Unfortunately, the demand does not increase. b. Competition forces the firm to give customers more time to pay for their purchases. c. Rising commodity prices increase the value of raw material inventories by 20%. d. The firm sell s a parcel of land for $100,000. The land was purchased five years earlier for $200,000. e. The firm repurchases its own common stock. f. The firm doubles its quarterly dividend. g. The firm issues $1 million of long-term debt and uses the proceeds to repay a short-term bank loan.

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Answer 1

Textbook Question

Chapter 29, Problem 1PS

Sources and uses of cash State whether each of the following events is a source or use of cash, or neither.

a. An automobile manufacturer increases production in response to a forecasted increase in demand. Unfortunately, the demand does not increase.
b. Competition forces the firm to give customers more time to pay for their purchases.
c. Rising commodity prices increase the value of raw material inventories by 20%.
d. The firm sell s a parcel of land for $100,000. The land was purchased five years earlier for $200,000.
e. The firm repurchases its own common stock.
f. The firm doubles its quarterly dividend.
g. The firm issues $1 million of long-term debt and uses the proceeds to repay a short-term bank loan.

Expert Solution & Answer

Summary Introduction

To determine: Whether each events is a source or application of cash or neither.

Explanation of Solution

Following table showing whether each events is a source or application of cash or neither:

Item name	Source or application	Reason
a	Application	Inventory increases and cash decreases(once supplier has been settled)
b	Application	Accounts receivable will raise while cash balance declines.
c	No change	Stock is recorded at cost and not in the market value.
d	Source	Long term asset will decrease, cash will increase and equity declines( by the post-tax capital loss)
e	Application	The cash will decrease while the treasury stock balance increases.
f	Application	Cash balance will decrease if the retrained earnings balance decrease.
g	No change	Long-term debt and short-term debt are in inverse relationship. That is if the long term debt increases the short term debt will get decrease.

Table (1)

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Students have asked these similar questions

American Products is concerned about managing cash efficiently. On average, inventories have an age of 90 days, and accounts receivable are collected in 60 days. Accounts payable are paid approximately 30 days after they arise. The firm’s operating-cycle investments are $30 million per year.Cost of goods sold are $20 million, and purchases are $15 million. a. Calculate the firm’s operating cycle. b. Calculate the firm’s cash conversion cycle. c. Calculate the amount of resources needed to support the firm’s cash conversion cycle. d. Discuss how management might be able to reduce the cash conversion cycle.

sources and Uses of Cash. How would each ofthe following events would affect the firm's balancesheet. State whether each change is a source or useof cash. (LO3)a.An automobile manufacturer increases produc-tion in response to a forecast increase in demand.Unfortunately, the demand does not increase.b.Competition forces the firm to give customersmore time to pay for their purchases.C.The firm sells a parcel (area) 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 anduses the proceeds to repay a short-term bank loan.

You have recently been hired to improve the performance of Multiplex Corporation, which has been experiencing a severe cash shortage. As one part of your analysis, you want to determine the firm’s cash conversion cycle. Using the following information and a 365-day year,(a) what is your estimate of the firm’s current cash conversion cycle? Current inventory = $241,000.00 • Annual sales = $1,200,000.00 • Accounts receivable = $300,000.00 • Accounts payable = $245,000.00 • Total annual purchases = $600,000.00 • Purchases credit terms: net 30 days. • Receivables credit terms: net 50 days.

Answer 2

Textbook Question

Chapter 29, Problem 1PS

Sources and uses of cash State whether each of the following events is a source or use of cash, or neither.

a. An automobile manufacturer increases production in response to a forecasted increase in demand. Unfortunately, the demand does not increase.
b. Competition forces the firm to give customers more time to pay for their purchases.
c. Rising commodity prices increase the value of raw material inventories by 20%.
d. The firm sell s a parcel of land for $100,000. The land was purchased five years earlier for $200,000.
e. The firm repurchases its own common stock.
f. The firm doubles its quarterly dividend.
g. The firm issues $1 million of long-term debt and uses the proceeds to repay a short-term bank loan.

Expert Solution & Answer

Summary Introduction

To determine: Whether each events is a source or application of cash or neither.

Explanation of Solution

Following table showing whether each events is a source or application of cash or neither:

Item name	Source or application	Reason
a	Application	Inventory increases and cash decreases(once supplier has been settled)
b	Application	Accounts receivable will raise while cash balance declines.
c	No change	Stock is recorded at cost and not in the market value.
d	Source	Long term asset will decrease, cash will increase and equity declines( by the post-tax capital loss)
e	Application	The cash will decrease while the treasury stock balance increases.
f	Application	Cash balance will decrease if the retrained earnings balance decrease.
g	No change	Long-term debt and short-term debt are in inverse relationship. That is if the long term debt increases the short term debt will get decrease.

Table (1)

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Answer 3

Textbook Question

Chapter 29, Problem 1PS

Sources and uses of cash State whether each of the following events is a source or use of cash, or neither.

a. An automobile manufacturer increases production in response to a forecasted increase in demand. Unfortunately, the demand does not increase.
b. Competition forces the firm to give customers more time to pay for their purchases.
c. Rising commodity prices increase the value of raw material inventories by 20%.
d. The firm sell s a parcel of land for $100,000. The land was purchased five years earlier for $200,000.
e. The firm repurchases its own common stock.
f. The firm doubles its quarterly dividend.
g. The firm issues $1 million of long-term debt and uses the proceeds to repay a short-term bank loan.

Expert Solution & Answer

Summary Introduction

To determine: Whether each events is a source or application of cash or neither.

Explanation of Solution

Following table showing whether each events is a source or application of cash or neither:

Item name	Source or application	Reason
a	Application	Inventory increases and cash decreases(once supplier has been settled)
b	Application	Accounts receivable will raise while cash balance declines.
c	No change	Stock is recorded at cost and not in the market value.
d	Source	Long term asset will decrease, cash will increase and equity declines( by the post-tax capital loss)
e	Application	The cash will decrease while the treasury stock balance increases.
f	Application	Cash balance will decrease if the retrained earnings balance decrease.
g	No change	Long-term debt and short-term debt are in inverse relationship. That is if the long term debt increases the short term debt will get decrease.

Table (1)

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Answer 4

Textbook Question

Chapter 29, Problem 1PS

Sources and uses of cash State whether each of the following events is a source or use of cash, or neither.

a. An automobile manufacturer increases production in response to a forecasted increase in demand. Unfortunately, the demand does not increase.
b. Competition forces the firm to give customers more time to pay for their purchases.
c. Rising commodity prices increase the value of raw material inventories by 20%.
d. The firm sell s a parcel of land for $100,000. The land was purchased five years earlier for $200,000.
e. The firm repurchases its own common stock.
f. The firm doubles its quarterly dividend.
g. The firm issues $1 million of long-term debt and uses the proceeds to repay a short-term bank loan.

Expert Solution & Answer

Summary Introduction

To determine: Whether each events is a source or application of cash or neither.

Explanation of Solution

Following table showing whether each events is a source or application of cash or neither:

Item name	Source or application	Reason
a	Application	Inventory increases and cash decreases(once supplier has been settled)
b	Application	Accounts receivable will raise while cash balance declines.
c	No change	Stock is recorded at cost and not in the market value.
d	Source	Long term asset will decrease, cash will increase and equity declines( by the post-tax capital loss)
e	Application	The cash will decrease while the treasury stock balance increases.
f	Application	Cash balance will decrease if the retrained earnings balance decrease.
g	No change	Long-term debt and short-term debt are in inverse relationship. That is if the long term debt increases the short term debt will get decrease.

Table (1)

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Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

Summary Introduction

To determine: Whether each events is a source or application of cash or neither.

Explanation of Solution

Following table showing whether each events is a source or application of cash or neither:

Item name	Source or application	Reason
a	Application	Inventory increases and cash decreases(once supplier has been settled)
b	Application	Accounts receivable will raise while cash balance declines.
c	No change	Stock is recorded at cost and not in the market value.
d	Source	Long term asset will decrease, cash will increase and equity declines( by the post-tax capital loss)
e	Application	The cash will decrease while the treasury stock balance increases.
f	Application	Cash balance will decrease if the retrained earnings balance decrease.
g	No change	Long-term debt and short-term debt are in inverse relationship. That is if the long term debt increases the short term debt will get decrease.

Table (1)

Answer 8

Expert Solution & Answer

Summary Introduction

To determine: Whether each events is a source or application of cash or neither.

Explanation of Solution

Following table showing whether each events is a source or application of cash or neither:

Item name	Source or application	Reason
a	Application	Inventory increases and cash decreases(once supplier has been settled)
b	Application	Accounts receivable will raise while cash balance declines.
c	No change	Stock is recorded at cost and not in the market value.
d	Source	Long term asset will decrease, cash will increase and equity declines( by the post-tax capital loss)
e	Application	The cash will decrease while the treasury stock balance increases.
f	Application	Cash balance will decrease if the retrained earnings balance decrease.
g	No change	Long-term debt and short-term debt are in inverse relationship. That is if the long term debt increases the short term debt will get decrease.

Table (1)

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Summary Introduction

To determine: Whether each events is a source or application of cash or neither.

Answer 12

Explanation of Solution

Following table showing whether each events is a source or application of cash or neither:

Item name	Source or application	Reason
a	Application	Inventory increases and cash decreases(once supplier has been settled)
b	Application	Accounts receivable will raise while cash balance declines.
c	No change	Stock is recorded at cost and not in the market value.
d	Source	Long term asset will decrease, cash will increase and equity declines( by the post-tax capital loss)
e	Application	The cash will decrease while the treasury stock balance increases.
f	Application	Cash balance will decrease if the retrained earnings balance decrease.
g	No change	Long-term debt and short-term debt are in inverse relationship. That is if the long term debt increases the short term debt will get decrease.

Table (1)

Answer 13

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Solution Summary: The author explains how the table shows whether each event is a source or application of cash or neither.

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