FINANCIAL MANAGEMENT

Financial Management



Financial Management

Q 1

Looking at the balance slips, accounts receivable, line 3, has boosted from $170,000 to $200,000 for a boost of $30,000. Since that boost occurred on the asset side of the balance sheet, it is shown as a negative figure. Why? If the firm extended $30,000 more in borrowing to its customers, then it had $30,000 less to use. Prepaid costs, line 5, declined by $10,000. A decline in asset account, a source of capital to the firm, is a affirmative number. Cash advanced by $35,000 but it is not included in our initial analysis.

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