Manufacturers and merchandisers can apply just in time (JIT) to their inventory management. Both Polaris and Arctic Cat want to know the impact of a JIT inventory system for their operating cash flows. Review each company's statement of cash flows in Appendix A to answer the following.
Required:
1. Identify the impact on operating cash flows (increase or decrease) for changes in inventory levels (increase or decrease) for both companies for each of the three most recent years.
2. What impact would a JIT inventory system have on both Polaris' and Arctic Cat's operating income? Link the answer to your response for part 1.
3. Would the move to a JIT system have a one time or recurring impact on operating cash flow?