Purchase Solution

Question about Cash Flow Decision-Making

Not what you're looking for?

Ask Custom Question

For a business organization to sustain its operations over an extended period of time, it is necessary to maintain proper management over its cash flow.

For each of the following scenarios, describe in detail the practices you would recommend.

Scenario 1: Over the past five years, your organization has experienced increasingly negative cash flow, requiring the business to take out a line of credit through a local bank to supplement cash shortfalls. Describe, in detail, the practices you would recommend to improve cash flow. Consider credit policies, collections, product pricing, and accounting processes, for example. Be sure to consider options for operating, financing, and investing activities, in your answer.

Scenario 2: Over the past three years, your business organization has experienced positive cash flow, in excess of the expectations of company management. Describe, in detail, your recommendations for bringing cash flow in line with management's expectations. Be sure to consider options for operating, financing, and investing activities, in your answer.

Purchase this Solution
Solution Summary

Cash flow decision making is analyzed.

Solution Preview

ANSWERS
Scenario 1
The first thing that needs to be done is for the company to analyse its cash flow statements for the past five years. By analyzing its cash flow statements, the company can pinpoint the specific activities that have been using its cash for the past few years (Anthony, Hawkins & Merchant, 2004, p. 359). Was it operating activities? Investing? Financing?

Most probably, the cash flow from the company's operating activities can not provide the cash that the ...

Purchase this Solution
Free BrainMass Quizzes
Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

View More Free Quizzes
Related BrainMass Solutions

  • Financial Statement Analysis

    that affect the decision making in the organization.

  • Deer Valley Lodge-Make or buy analysis

    Determine the after tax net cash flow (net income)? i. Determine the NPV of the after tax net cash flow (net income)? b.

  • Create a Capital Budgeting Problem

    The net present value method This solution gives a detailed demonstration of the use of capital budgeting techniques in decision making.

  • Discounted-Cash Flow Models for Decision-Making

    158987 How would financial managers use discounted-cash flow models for decision-making. Some capital-budgeting choices require managers to decide between upgrading high-technology research equipment and not upgrading.

  • Capital Decision for Cash Flows or Accounting Profits

    Should the company be interested in incremental cash flow, incremental profit, total free cash flow, or total profit. Should a company focus on cash flows or accounting profits in making a capital decision?

  • Project Evaluation and Screening Methods

    If the company is adamant about using the discounted cash flow model, I would strongly suggest that it be used as one factor of many factors to actually make the decision.

  • Define each part of a financial plan

    //After being familiar with the different parts of the financial plan, i.e. income statement, balance sheet and cash flow statement, it is essential to gain knowledge about its significance in the managerial decision making.

  • Your friend comments, 'I just ignore the income statement wh

    420916 Your friend comments, 'I just ignore the income statement when I'm making an investment decision. All I care about is the cash, so that the company can pay me dividends.

  • Deer Valley Lodge -Responsibility Center & Financial Control

    Compute the net present value of the before tax net cash inflow (net income). a. Based on this information, is this a good investment? 6. This question requires three steps. a. Determine the after tax net cash flow (net income)? i.

  • expected NPV criterion

    Notice that we're making this decision solely based on the expected NPV - an actual firm might take other factors into consideration besides expected NPV, such as the variance of the cash flows.

View More Related Solutions