You have a start on the project but you did not have a correct solution to the problem nor did you discuss PP&E. Think of the problem this way. The problem for fast growing companies is that their assets are growing (a use of cash), at a much faster rate than cash is being received. Large sales increases force the company to increase inventory, A/R grows and they buy additional PP&E to keep up with sales demand. This investment in new assets outstrips the company's ability to produce enough cash flow for these asset investments and pay their bills on time. To support this growth (and looking at the cash flow statement) what is a source of cash the company can turn to? Remember the right-hand side of the balance sheet is known as the financing side. Also notice the company needs perminate working capital to replace their working capital that is now tied up in growing assets. (Hint: Think of the last time you invested in a large asset like a home or car. Did you pay all cash for the asset? Why not? If you would have paid all cash for the purchase: Would you have had enough cash to pay your monthly bills on time? How did you solve the problem? Also, as the CFO of a fast-growing company who is always cash short. What would you want to know? Maybe, the rate of cash lockup in growing assets. So, what should you review and maybe even want to project for the future? Cash can go down even when sales are up due to high levels of accounts receivable. Semtell Company needs to ensure that they are collecting what is owed to them from customers who are buying goods and services using credit. Credit sales should be paid attention to and it should be prioritized to close out a majority of open accounts within 30 to 45 days. Keeping track of what is owed and ensuring prompt payment will help Semtell Company increase cash and pay vendors on time. An increase in assets such as accounts receivable, suggests that there is a cash outflow. An increase in accounts receivable shows that the amount owed to Semtell Company by creditors and vendors has increased. Semtell Company can shorten loan terms to 30 days and offer discounts if paid in full at the time of sale in order to create more cash income and produce enough cash to meet payroll and pay vendors. Inventory should not be held for long and should be sold at a steady rate in order to free holding costs and working capital. Month end high inventory volumes are blocking the cash needed to pay for wages. Changes in accounts payable affect a companies' cash flows because not all services or inventory purchased is required to be purchased using cash or being paid in full at the time of sale. Sales credit is often used to make purchases and monies will not be due right away. These short-term liabilities are called accounts payable on the balance sheet. Semtell company can either make credit purchases over a period of time, increasing initial cash on hand or take advantage of creditor discounts by paying in full. Semtell should not be making payments to suppliers and creditors in a shorter period of time than we are offering to our credit line customers. Adjusting this pay schedule to suppliers and creditors will allow an adequate cash inflow to outflow. Working capital is an increase in current assets, such as accounts receivable and inventory, which is a use for cash. If during the year a firm increases its accounts payable, it has effectively borrowed money from suppliers and increased its cash position. (Parring, Kidwell & Bates, 2018). A solution to the shortage of working capital includes implementing changes in several areas. Proper inventory management and adjusting credit terms with suppliers and customers will help Semtell Company acquire sufficient cash flow to pay vendors and wages