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Would The Cash flow stille exist if the project does not exisst?

If yes, do not incldue it in your analysis,


If no, include it

A project that increased sales was accompanied by a $50,000 increase in inventory, a $20,000 increase in accounts receivabl
increase in accounts payable. Assuming these amounts remain constant, by how much has net working capital increased?

Q1)
Net Working Capital:
45000

Q2)
What is the amount of the operating cash flow for a firm with $500,000 profit before tax,
$100,000 depreciation expense, and a 35% marginal tax rate?

Profit Before Tax 500000


Depreciation Expense 100000
Marginal Tax Rate 35%
Operating Cash Flow)
Step 1) Find Tax 175000
Step 2) Substract Tax from Profit 325000
Step 3) Add Depreciation 425000

Q3
What is the net effect on a firm's working capital if a new project
requires: $30,000 increase in inventory, $10,000 increase in
accounts receivable, $35,000 increase in machinery, and a $20,000
increase in accounts payable?

Increase in Inventory $ 30,000.00 ST


A/R $ 10,000.00 ST
Increase in Machinery $ 35,000.00 LT
Increae A/P $ 20,000.00 ST
Net Effect on WC $ 20,000.00
20,000 increase in accounts receivable, and a $25,000
has net working capital increased?

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