FIN 370 Course Great Wisdom / tutorialrank.com FIN 370 Course Great Wisdom / tutorialrank.com | Page 20
Accepting a supplier ’ s discount for early payment decreases the cash cycle .
Increasing the accounts payable period increases the cash cycle .
The longer the cash cycle , the more likely a firm will need external financing .
The cash cycle can exceed the operating cycle if the payables period is equal to zero .
Offering early payment discounts to customers will tend to increase the cash cycle .
Precise Machinery is analyzing a proposed project . The company expects to sell 2100 units give or take 5 percent . The expected variable cost per unit is $ 260 and the expected fixed costs are $ 589,000 . Cost estimates are considered accurate within a plus or minus 4 percent range . The depreciation expense is $ 129,000 . The sales price is estimated at $ 750 per unit , give or take 2 percent . The tax rate is 35 percent . The company is conducting a sensitivity analysis on the sales price using a sales price estimate of $ 755 . What is the operating cash flow based on this analysis ?
Accepting a supplier ’ s discount for early payment decreases the cash cycle .
Increasing the accounts payable period increases the cash cycle .
The longer the cash cycle , the more likely a firm will need external financing .
The cash cycle can exceed the operating cycle if the payables period is equal to zero .
Offering early payment discounts to customers will tend to increase the cash cycle .
Precise Machinery is analyzing a proposed project . The company expects to sell 2100 units give or take 5 percent . The expected variable cost per unit is $ 260 and the expected fixed costs are $ 589,000 . Cost estimates are considered accurate within a plus or minus 4 percent range . The depreciation expense is $ 129,000 . The sales price is estimated at $ 750 per unit , give or take 2 percent . The tax rate is 35 percent . The company is conducting a sensitivity analysis on the sales price using a sales price estimate of $ 755 . What is the operating cash flow based on this analysis ?