Can someone please give me not only the answer, but the work involved with this?
ID: 2628092 • Letter: C
Question
Can someone please give me not only the answer, but the work involved with this? I have been trying to work this one out for a while now!
Six Twelve, Inc., is considering opening up a new convenience store in downtown New York City. The expected annual revenue at the new store is $900,000. To estimate the increase in working capital, analysts estimate the ratio of cash and cash-equivalents to revenue to be 0.03 and the ratios of receivables, inventories, and payables to revenue to be 0.05, 0.10, and 0.04, respectively, in the same industry. What is the incremental cash flow related to working capital when the store is opened?
Explanation / Answer
cash flow related to working capital in year=900 000 x (0.03+0.05)=72000 answer