KTM and Piaggio are competitors in the global marketplace. KTM’s and Piaggio’s financial statements are in Appendix A.

Required
1. Determine the change in KTM’s and Piaggio’s inventories for the most recent year reported. Then identify the impact on net resources generated by operating activities (increase or decrease) for the change in inventory level (increase or decrease) for KTM and Piaggio for that same year.
2. How would the move to a just-in-time (JIT) system likely impact future operating cash flows and operating income?
3. Would a move to a JIT system likely impact KTM more than it would Piaggio? Explain.