Question
Value Added Inc. buys $1 million of sows ears at the beginning of January but doesnt pay immediately. Instead, it agrees to pay the bill
Value Added Inc. buys $1 million of sows ears at the beginning of January but doesnt pay immediately. Instead, it agrees to pay the bill in March. It processes the ears into silk purses, which it sells for $2 million in February. However, it will not collect payment on the sales until April. (LO3-3)
a.What is the firms net income in February?
b.What is its net income in March?
c.What is the firms net new investment in working capital in January?
d.What is its net new investment in working capital in April?
e.What is the firms cash flow in January?
f.What is the firms cash flow in February?
g.What is the cash flow in March?
h.What is the cash flow in April?
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