Statement o Cash Flow

1. Decisions:

What can be done to create a positive cash flow.

Meggie Mohammed, CEO, knew that the bank would carefully review her company's most recent statemet of cash flows before determining if it would approve the loan needed for expansion. The Bank loan officer had told her that it is important that the business show strong operating cash flow. Meggie knows that her company's operating cash flow for the past quarter will most likely be negative. Although the company recorded significant revenue, most of the revenue was recorded as receivables. Meggie expects that the cash will come in sonn, but not in time to report a positive cash flow. What should Meggie do? What would you do?

2.Ethics:

Should the notes payable be reclassified?

Michael Reinstein has just left the office of his supervisor, Scott Medley. The supervisor had mentioned that Michael should reclassify a cash receipt from issuance of long term notes payable as a short term notes payable. Scott had shared with Michael that the chairman of he Board of Directors was placing intense pressure on him to report a positive cash flow from operating activities. Michael knew that if the company reclassified the notes payable, the business would no longer report the receiptin the financing activities section of the statement of cash flows. Instead, it would be shown as an increasein current liabilities resulting in a positiove cash flow from operating activities. What should Michael do? What would you do?

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