Please circle the answers. These are scenario question so market knowledge is needed. Also, please don't copy the other answers that exist in chegg already because those are not correct. Thank you.
A B C D E F G Hypothesized Scenario 1 Assume a new competitor enters the market and that drives Gross Margin to 25% What is the forecasted Net Income? 125 126 127 128 129 130 131 132 What is the forecasted Cash balance? 133 Hypothesized Scenario 2 Set the DSO equal to 10 days Leave the Gross Margin at 25% What is the forecasted Cash balance? 134 135 136 137 138 See how the: 139 140 141 Reduction of DSOs reduced 'Accounts Receivable' on the Balance Sheet and Impacted '-Increase in Accounts Receivable' on the Cash Flow Statement, Which impacts 'Cash' on the Balance Sheet. 142 143 144 145 Hypothesized Scenario 3 Construct a new plant increasing CapEx to $100 (remember that this is a -100 in the model as it is a use of cash) Leave the Gross Margin at 25% and the DSO at 10% What is the forecasted Cash balance? 146 147 148 What is the forecasted PP&E balance? 149 150 151 See how the: 152 153 154 Investment in Capex has an impact on PP&E, Affects Cash Flow on the Cash Flow Statement, Reduces the Cash Balance on the Balance Sheet and Lowers GAAP Net Income as Depreciation rises. 155 156 A B C D E F G Hypothesized Scenario 1 Assume a new competitor enters the market and that drives Gross Margin to 25% What is the forecasted Net Income? 125 126 127 128 129 130 131 132 What is the forecasted Cash balance? 133 Hypothesized Scenario 2 Set the DSO equal to 10 days Leave the Gross Margin at 25% What is the forecasted Cash balance? 134 135 136 137 138 See how the: 139 140 141 Reduction of DSOs reduced 'Accounts Receivable' on the Balance Sheet and Impacted '-Increase in Accounts Receivable' on the Cash Flow Statement, Which impacts 'Cash' on the Balance Sheet. 142 143 144 145 Hypothesized Scenario 3 Construct a new plant increasing CapEx to $100 (remember that this is a -100 in the model as it is a use of cash) Leave the Gross Margin at 25% and the DSO at 10% What is the forecasted Cash balance? 146 147 148 What is the forecasted PP&E balance? 149 150 151 See how the: 152 153 154 Investment in Capex has an impact on PP&E, Affects Cash Flow on the Cash Flow Statement, Reduces the Cash Balance on the Balance Sheet and Lowers GAAP Net Income as Depreciation rises. 155 156
