Â Sales: A transaction between a buyer and a seller to exchange goods and services for money is termed as sales. It is a process in which the seller agrees to shift the entitlement of the product or service to the consumers and receives monetary compensation amounting to the price of the product or service in exchange. Cash resources: Instruments or resources through which a company can raise cash for its operations are defined as cash resources. Cash resources are of two types: 1. Short-term cash resources, through which a company raises cash to meet short-term requirements. Examples include cash credit, short-term loan, and bank overdraft. 2. Long-term cash resources, through which a company raises cash for long-term requirements. Examples include long-term loans, debentures, and issue of shares.

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Answer 1

Question

Chapter 6, Problem 1DQ

Summary Introduction

Introduction:Â

Sales:

A transaction between a buyer and a seller to exchange goods and services for money is termed as sales. It is a process in which the seller agrees to shift the entitlement of the product or service to the consumers and receives monetary compensation amounting to the price of the product or service in exchange.

Cash resources:

Instruments or resources through which a company can raise cash for its operations are defined as cash resources. Cash resources are of two types:

1. Short-term cash resources, through which a company raises cash to meet short-term requirements. Examples include cash credit, short-term loan, and bank overdraft.

2. Long-term cash resources, through which a company raises cash for long-term requirements. Examples include long-term loans, debentures, and issue of shares.

Expert Solution & Answer

Answer to Problem 1DQ

Expansion of sales leads to a reduction in cash resources because a firm has to increase its inventories and purchase more raw materials. It also increases the accounts receivable of the firm. At the time of sales, the company needs some products for promotional purposes.

Explanation of Solution

Expansion of sales leads to a reduction in cash resources because it requires more inventory and raw material for production. Stocking inventory and purchasing raw material requires cash, which reduces its resources.

Due to the expansion of sales, the probability of an increase in the accounts receivables also increases, which sometimes makes cash sales less in number than credit sales.

At the time of sales, the company needs more products for floor displays, selection and other purposes. Usually, the products used for promotion are not for sale, which is why investment in these products also drains cash or its resources.

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Students have asked these similar questions

Why might one firm have positive cash flows and be headed for financial trouble, whereas another firm with negative cash flows could actually be in a good financial position? (200-300 words)

Which of the following decreases the cash holding A.The rising commodity prices increases the value of law material inventoriesby 10% B.A manufacturer decreases production in anticipation of a decrease in demand C.THe frim repurchases its own stocks D.THe corporation has decided to give their customer less time in paying their purchases

Which one of the following statements is correct? A. If a firm decreases its inventory period, its accounts receivable period will also decrease. B. The longer the cash cycle, the more cash a firm typically has available to invest. C. A firm would prefer a negative cash cycle over a positive cash cycle. D. Decreasing the inventory period will also decrease the payables period. E. Both the operating cycle and the cash cycle must be positive values.

Answer 2

Question

Chapter 6, Problem 1DQ

Summary Introduction

Introduction:Â

Sales:

A transaction between a buyer and a seller to exchange goods and services for money is termed as sales. It is a process in which the seller agrees to shift the entitlement of the product or service to the consumers and receives monetary compensation amounting to the price of the product or service in exchange.

Cash resources:

Instruments or resources through which a company can raise cash for its operations are defined as cash resources. Cash resources are of two types:

1. Short-term cash resources, through which a company raises cash to meet short-term requirements. Examples include cash credit, short-term loan, and bank overdraft.

2. Long-term cash resources, through which a company raises cash for long-term requirements. Examples include long-term loans, debentures, and issue of shares.

Expert Solution & Answer

Answer to Problem 1DQ

Expansion of sales leads to a reduction in cash resources because a firm has to increase its inventories and purchase more raw materials. It also increases the accounts receivable of the firm. At the time of sales, the company needs some products for promotional purposes.

Explanation of Solution

Expansion of sales leads to a reduction in cash resources because it requires more inventory and raw material for production. Stocking inventory and purchasing raw material requires cash, which reduces its resources.

Due to the expansion of sales, the probability of an increase in the accounts receivables also increases, which sometimes makes cash sales less in number than credit sales.

At the time of sales, the company needs more products for floor displays, selection and other purposes. Usually, the products used for promotion are not for sale, which is why investment in these products also drains cash or its resources.

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Answer 3

Question

Chapter 6, Problem 1DQ

Summary Introduction

Introduction:Â

Sales:

A transaction between a buyer and a seller to exchange goods and services for money is termed as sales. It is a process in which the seller agrees to shift the entitlement of the product or service to the consumers and receives monetary compensation amounting to the price of the product or service in exchange.

Cash resources:

Instruments or resources through which a company can raise cash for its operations are defined as cash resources. Cash resources are of two types:

1. Short-term cash resources, through which a company raises cash to meet short-term requirements. Examples include cash credit, short-term loan, and bank overdraft.

2. Long-term cash resources, through which a company raises cash for long-term requirements. Examples include long-term loans, debentures, and issue of shares.

Expert Solution & Answer

Answer to Problem 1DQ

Expansion of sales leads to a reduction in cash resources because a firm has to increase its inventories and purchase more raw materials. It also increases the accounts receivable of the firm. At the time of sales, the company needs some products for promotional purposes.

Explanation of Solution

Expansion of sales leads to a reduction in cash resources because it requires more inventory and raw material for production. Stocking inventory and purchasing raw material requires cash, which reduces its resources.

Due to the expansion of sales, the probability of an increase in the accounts receivables also increases, which sometimes makes cash sales less in number than credit sales.

At the time of sales, the company needs more products for floor displays, selection and other purposes. Usually, the products used for promotion are not for sale, which is why investment in these products also drains cash or its resources.

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Answer 4

Question

Chapter 6, Problem 1DQ

Summary Introduction

Introduction:Â

Sales:

A transaction between a buyer and a seller to exchange goods and services for money is termed as sales. It is a process in which the seller agrees to shift the entitlement of the product or service to the consumers and receives monetary compensation amounting to the price of the product or service in exchange.

Cash resources:

Instruments or resources through which a company can raise cash for its operations are defined as cash resources. Cash resources are of two types:

1. Short-term cash resources, through which a company raises cash to meet short-term requirements. Examples include cash credit, short-term loan, and bank overdraft.

2. Long-term cash resources, through which a company raises cash for long-term requirements. Examples include long-term loans, debentures, and issue of shares.

Expert Solution & Answer

Answer to Problem 1DQ

Expansion of sales leads to a reduction in cash resources because a firm has to increase its inventories and purchase more raw materials. It also increases the accounts receivable of the firm. At the time of sales, the company needs some products for promotional purposes.

Explanation of Solution

Expansion of sales leads to a reduction in cash resources because it requires more inventory and raw material for production. Stocking inventory and purchasing raw material requires cash, which reduces its resources.

Due to the expansion of sales, the probability of an increase in the accounts receivables also increases, which sometimes makes cash sales less in number than credit sales.

At the time of sales, the company needs more products for floor displays, selection and other purposes. Usually, the products used for promotion are not for sale, which is why investment in these products also drains cash or its resources.

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Answer 5

Chapter 6, Problem 1DQ

Summary Introduction

Introduction:Â

Sales:

A transaction between a buyer and a seller to exchange goods and services for money is termed as sales. It is a process in which the seller agrees to shift the entitlement of the product or service to the consumers and receives monetary compensation amounting to the price of the product or service in exchange.

Cash resources:

Instruments or resources through which a company can raise cash for its operations are defined as cash resources. Cash resources are of two types:

1. Short-term cash resources, through which a company raises cash to meet short-term requirements. Examples include cash credit, short-term loan, and bank overdraft.

2. Long-term cash resources, through which a company raises cash for long-term requirements. Examples include long-term loans, debentures, and issue of shares.

Expert Solution & Answer

Answer to Problem 1DQ

Expansion of sales leads to a reduction in cash resources because a firm has to increase its inventories and purchase more raw materials. It also increases the accounts receivable of the firm. At the time of sales, the company needs some products for promotional purposes.

Explanation of Solution

Expansion of sales leads to a reduction in cash resources because it requires more inventory and raw material for production. Stocking inventory and purchasing raw material requires cash, which reduces its resources.

Due to the expansion of sales, the probability of an increase in the accounts receivables also increases, which sometimes makes cash sales less in number than credit sales.

At the time of sales, the company needs more products for floor displays, selection and other purposes. Usually, the products used for promotion are not for sale, which is why investment in these products also drains cash or its resources.

Answer 6

Chapter 6, Problem 1DQ

Summary Introduction

Introduction:Â

Sales:

A transaction between a buyer and a seller to exchange goods and services for money is termed as sales. It is a process in which the seller agrees to shift the entitlement of the product or service to the consumers and receives monetary compensation amounting to the price of the product or service in exchange.

Cash resources:

Instruments or resources through which a company can raise cash for its operations are defined as cash resources. Cash resources are of two types:

1. Short-term cash resources, through which a company raises cash to meet short-term requirements. Examples include cash credit, short-term loan, and bank overdraft.

2. Long-term cash resources, through which a company raises cash for long-term requirements. Examples include long-term loans, debentures, and issue of shares.

Expert Solution & Answer

Answer to Problem 1DQ

Expansion of sales leads to a reduction in cash resources because a firm has to increase its inventories and purchase more raw materials. It also increases the accounts receivable of the firm. At the time of sales, the company needs some products for promotional purposes.

Explanation of Solution

Expansion of sales leads to a reduction in cash resources because it requires more inventory and raw material for production. Stocking inventory and purchasing raw material requires cash, which reduces its resources.

Due to the expansion of sales, the probability of an increase in the accounts receivables also increases, which sometimes makes cash sales less in number than credit sales.

At the time of sales, the company needs more products for floor displays, selection and other purposes. Usually, the products used for promotion are not for sale, which is why investment in these products also drains cash or its resources.

Answer 7

Chapter 6, Problem 1DQ

Summary Introduction

Introduction:Â

Sales:

A transaction between a buyer and a seller to exchange goods and services for money is termed as sales. It is a process in which the seller agrees to shift the entitlement of the product or service to the consumers and receives monetary compensation amounting to the price of the product or service in exchange.

Cash resources:

Instruments or resources through which a company can raise cash for its operations are defined as cash resources. Cash resources are of two types:

1. Short-term cash resources, through which a company raises cash to meet short-term requirements. Examples include cash credit, short-term loan, and bank overdraft.

2. Long-term cash resources, through which a company raises cash for long-term requirements. Examples include long-term loans, debentures, and issue of shares.

Answer 8

Expert Solution & Answer

Answer to Problem 1DQ

Expansion of sales leads to a reduction in cash resources because a firm has to increase its inventories and purchase more raw materials. It also increases the accounts receivable of the firm. At the time of sales, the company needs some products for promotional purposes.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Expansion of sales leads to a reduction in cash resources because it requires more inventory and raw material for production. Stocking inventory and purchasing raw material requires cash, which reduces its resources.

Due to the expansion of sales, the probability of an increase in the accounts receivables also increases, which sometimes makes cash sales less in number than credit sales.

At the time of sales, the company needs more products for floor displays, selection and other purposes. Usually, the products used for promotion are not for sale, which is why investment in these products also drains cash or its resources.

Answer 12

Ch. 6 - Prob. 1DQ Ch. 6 - Prob. 2DQ Ch. 6 - Prob. 3DQ Ch. 6 - Prob. 4DQ Ch. 6 - â€œThe most appropriate financing pattern would be...Ch. 6 - Prob. 6DQ Ch. 6 - Prob. 7DQ Ch. 6 - Prob. 8DQ Ch. 6 - What are three theories for describing the shape...Ch. 6 - Since the mid-1960s, corporate liquidity has been...

Answer to Problem 1DQ

Explanation of Solution

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Chapter 6 Solutions