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posted by  Anonymous on 11/12/2009 4:48:02 PM  |  status: Live  |  Earned Karma: 0

working capital management

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Financial Accounting Fundamentals of Corporate Finance 19 N/A 11/13/2009 at 4:00:00 PM
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Working Capital Management. Indicate how each of the following six different transactions that Dynamic Mattress might make would affect (i) cash and (ii) net working capital:

a. Paying out a $2 million cash dividend.

b. A customer paying a $2,500 bill resulting from a previous sale.

c. Paying $5,000 previously owed to one of its suppliers.

d. Borrowing $1 million long-term and investing the proceeds in inventory.

e. Borrowing $1 million short-term and investing the proceeds in inventory.

f. Selling $5 million of marketable securities for cash.

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posted by Jonpp on 11/13/2009 3:13:46 PM  |  status: Live
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Response Details:

1 Decrease Decrease

2 Increase No change

3.Decrease No Change

4. No Change(money raised will be spent) Increase

5 No Change No Change (inventory increases....so does liability)

6 Increase No change(marketable securities replaced by cash)
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