Given:

AR advance rate 85%

Inventory advance rates: raw material 25%, finished goods 50%

Ineligible AR consists of invoices aged over 90 days

Company has terms with vendors no cash is due to vendors upon receipt of raw materials

For each scenario below calculate the impact on cash, availability and net liquidity (cash + availability)

1.Eligible AR of $1000 is collected

2.Raw material of $800 is received, eligible AR of $500 is collected

3.Inventory of $1000 is sold for $2000

4.Raw material of $100 is received, raw material of $200 is converted to finished goods, finished goods of $50 is sold for $100, eligible invoices of $50 are collected

5.Ineligible AR of $1,000 is collected, raw material of $800 is procured, raw material of $500 is converted to finished goods