BPS, inc., is proposing to offer 60-day terms to its customers and 6-hour fixed price delivery. It believes this will increase sales by 15%. The projections supplied (below) reflect extra operating expenses (higher delivery costs) and extra inventory being held to guarantee availability. However, they assume that Only some customers will take advantage of the longer terms, which in your view is not realistic. Management belleves its short-term line of credit of $350,000 will be sufficient to help finance the expansion, based on the projections However, if all of gPS's customers take the full 60 days to pay, what cash flow impact is likely to be reflected in the line of credit funding need?

BPS inc. (in $000s)	31 Dec 20Y3	31 Dec 20Y4
Sales	6,504	7,480
Cost of Goods Sold	4,814	5,535
Gross Profit	1,690	1,945
Operating Expenses	1,387	1,730
Operating Profit	303	215
Accounts Receivable	785	1,050
Inventory	1,075	1,325
Accounts Payable	473	545

O Cash flow will decline by around $545,000, meaning a higher short-term line of credit will required.

O Cash flow will decline by around $180,000, meaning a higher short-term line of credit will be required.

O Cash flow will decline by around $1,330,000, meaning a higher short-term line of credit will be required