Suppose your firm receives a $5.9 million order on the last day of the year. You fill
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Suppose your firm receives a $5.9 million order on the last day of the year. You fill the order with $1.9 million worth of inventory. The customer picks up the entire order the same day and pays $2.8 million upfront in cash; you also issue a bill for the customer to pay the remaining balance of $3.1 million in 30 days. Suppose your firm’s tax rate is 0% (i.e., ignore taxes). Determine the consequences of this transaction for each of the following:
a. Revenues
b. Earnings
c. Receivables
d. Inventory
e. Cash AppendixLO1
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Related Book For
Corporate Finance The Core
ISBN: 9781292431611
5th Global Edition
Authors: Jonathan Berk, Peter DeMarzo
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