1. Working Capital Management. Indicate howeach of the following six different t

Question

1. Working Capital Management. Indicate howeach of the following six different transactions that acompany might make would affect (i) cash and (ii) net workingcapital:

a. Paying out a $2 million cash dividend.

b. A customer paying a $2,500 bill resulting from a previoussale.

c. Paying $5,000 previously owed to one of its suppliers.

d. Borrowing $1 million long-term and investing the proceeds ininventory.

e. Borrowing $1 million short-term and investing the proceeds ininventory.

f. Selling $5 million of marketable securities for cash.

Explanation / Answer

These are the answers I came up with.... A.decrease in cash, increase in equity B. increase in cash, increase in working capital C. decrease in cash, reduce in net working capital D. Increase in cash, decrease in long term assets E. increase in cash, increase in assets F. increase in cash, reduce working capital

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