COMMERCIAL BANK PRACTICE and POLICY QUESTION.
1. In each of the following cases, indicate whether the item noted will increase, decrease or not affect a firm’s cash flow from operations. Provide your reasoning.
a. Accounts payable fall from $73,900 to $46,400
b. Prepaid expenses fall from $22,400 to $11,700
a. Accounts receivable rise from $115,000 to $418,200
2. A firm is reporting net income that is increasingly rising each year, but is experiencing negative cash flow from operations. Provide two reasons why this might be the case and explain each.
3. In a FLAT sales environment, how is a Bank Loan repaid? What is the source of repayment?