Evaluating the Timing of Cash Flows The manager of Champion Catering was quite excited when he learned that the cash flows for his business had more than doubled in November. Instead of the normal $5,000 positive cash flow per month, the cash flow for November was

$12,400. To be sure there was not an error, he made up the following summary of cash receipts and disbursements for the month:

He also noted that his new “Pay Ahead—Get A Discount”
program had been very successful. He had no uncollected receivables from customers at the end of November and had received prepayment for catering to be provided at several Christmas parties. He remembered that one of his employees was on vacation over Thanksgiving and was not paid for the second half of the month. A total of $3,000 is owed to the employee for work in November.
The manager is hopeful that this upturn in cash flows will continue for the next several months so he can purchase his own building. Evaluate the November cash flow for Champion Catering and assess the likelihood of being able to sustain the good fortunes of November.

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Collections on catering provided this month $11,500 Collections on catering provided last month 3,200 Deposits for catering to be provided next month Payments for salaries and catering supplies 3,400 4,500 Payment of building rent 1,200