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Value Added Inc. buys $1.5 million of sows ears at the beginning of January but does not pay the full price immediately. Instead, it agrees
Value Added Inc. buys $1.5 million of sows ears at the beginning of January but does not pay the full price immediately. Instead, it agrees to pay $0.5 million right away and the rest of the bill in March. It processes the ears into silk purses, which it sells for $3.5 million in February. It only receives $1.5 million in advance. However, it will not collect payment on the sales until April.
- What is the firms net income in February?
- What is its net income in March?
- What is the firms net new investment in working capital in January?
- What is the firms cash flow in Jannuary?
- What is the firms cash flow in February?
- What is the cash flow in March?
- What is the cash flow in April?
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