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Please do the two required in this question, show full steps whenever necessary. Part B (6 marks) Starlet Corporation manufactures and markets shoes under the
Please do the two required in this question, show full steps whenever necessary.
Part B (6 marks) Starlet Corporation manufactures and markets shoes under the brand name Start Rite and Keds. Three recent years produced a combination of declining sales revenue, and net income, culminating in a net loss of $8,430,000. Each year, however, Starlet Corporation was able to report positive cash flows from operations. Contributing to that positive cash flow was the change in accounts receivable. The current and prior year balance sheets reported the following: in thousands) Current Year $48,000 Previous Year $63,403 Accounts receivable Required: 1. How would the change in accounts receivable affect cash flow from operations for the current year? Briefly explain why it would have this effect and how net earnings would be adjusted for the change in accounts receivable on the cash flow from operations including the amount. (4 marks) 2. Briefly explain how declining sales revenue often leads to (a) declining accounts receivable and (b) an excess of cash collections from customers over sales revenue. (2 marks)Step by Step Solution
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