EXERCISE $6$: CASH FLOW FROM INTERNAL OPERATIONS

Owners of a business are contemplating investing $$550,000$ in non$-$current assets in

early January $2014.$ They are exploring ways to finance it$.$ In $2012,$ the company had

$$250,000$ in trade receivables, an amount that it expects will increase to $$275,000$ in

The inventory level for $2012$ was $$430,000$ and, having introduced a new

inventory management system, the owners expect to be more efficient in managing

it$.$ They forecast a level of $$370,000$ in inventories by the end of $2013.$ They expect

a substantial increase in revenue, which will increase their profit from $$150,000$ in

$2012$ to $$230,000$ in $2013.$

Questions

How much cash will be generated from internal operations by the end

of $2013?$

Will the owners have to borrow money from investors to finance the

expansion? If yes, how much?

how much does expansion