Identifying Cash Flow Information Your consulting team is preparing a report about the operations of the Tower Company as a part of an overall evaluation to determine whether to help Tower obtain financing for a major project. You are trying to anticipate as many questions as possible that might come up in the next team meeting. Where would you look in Tower’s financial statements or notes to answer the following questions?

a. Will Tower be able to pay off current maturities of longterm debt without additional borrowing?

b. Is the company retaining operating cash by delaying payment to its suppliers?

c. As sales increase, the accounts receivable and inventory balances will probably increase. Will Tower have to use the proceeds of the new financing to cover its operating cash needs?

d. If operating cash needs increase, will dividends have to be reduced?

e. To what extent is net income a reasonable forecast of the cash generated from operations by Tower?