In this, it will be a business letter to share advice with a company's chief financial officer (CFO). You will explain complex financial data and discuss the cause and effect of select accounting transactions on cash balances.

Read the fictional scenario and respond to the checklist items.

Scenario:

The CFO, Karl Richland, of Semtell Company in Cincinnati, Ohio, is asking for your advice. The CFO explains sales are increasing, but there is a constant matter of not having enough cash to meet payroll or pay vendors within 30 days.

Checklist: 

Using the information in the company's cash flow statement, format an informational business letter to the CFO explaining the seven items listed below. Note: There is no actual cash flow statement to look at, but the letter must be based on your understanding of the cash flow statement and what represents the sources and uses of cash.

1) Explain why cash can go down even when sales are up.

2) Explain how increases in accounts receivables and inventory balances affect cash flows within a company.

3) Explain what effect increases or decreases in asset and liability accounts have on cash flow.

4) Explain how changes in accounts payable balances impact cash flows.

5) Recommend a possible solution for the company's shortage of working capital. And all of the following : 

1) The analysis includes business transactions per explanations of the cause and effect and their impacts on cash balances. 

2) The analysis notes the interrelationship of Sales, Inventory, Accounts Receivable, and Accounts Payable on cash flow. 

3) The analysis gives reasons the company is short of working capital.

Your informational business letter should:

Include at least one scholarly, high-quality, and current Purdue Global Library source and/or your textbook.

Includes 1) Appropriate judgment on the cash flow situation and support is sufficient to recommend the correct solution, and 2) analysis and comparisons are presented with appropriate accounting and bookkeeping terminology to discuss company financials with the CFO successfully.