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Complete Questions 16.3-16.10 in your own words and in-detailed explanation!  DON'T MISS A SINGLE QUESTION!

Complete Questions 16.3-16.10 in your own words and in-detailed explanation!  DON'T MISS A SINGLE QUESTION!

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Complete Questions 16.3-16.10 in your own words and in-detailed explanation! 

DON'T MISS A SINGLE QUESTION!

LO3 16.3 LO2 16.4 LO1 16.5 Use the following information to answer Questions 16.6-16.10. Last month, BlueSky Airline announced that it would stretch out its bill payments to 45 days from 30 days. The reason given was that the company wanted to "control costs and optimize cash flow." The increased payables period will be in effect for all of the company's 4,000 suppliers. Page 551 LO1 16.6 What impact did this change in payables policy have on BlueSky's operating cycle? LO1 16.7 LO1 16.8 Sources and Uses For the year just ended, you have gathered the following information on the Holly Corporation: a. A $200 dividend was paid. b. Accounts payable increased by $500. c. Fixed asset purchases were $900. d. Inventories increased by $625. e. Long-term debt decreased by $1,200. Label each item as a source or use of cash and describe its effect on the firm's cash balance. Cost of Current Assets Kane Manufacturing, Inc., has recently installed a just-in-time (JIT) inventory system. Describe the effect this is likely to have on the company's carrying costs, shortage costs, and operating cycle. Cycles Is it possible for a firm's cash cycle to be longer than its operating cycle? Explain why or why not. LO1 16.9 LO1 16.10 Operating and Cash Cycles Its cash cycle? Operating and Cash Cycles What impact did the announcement have on BlueSky's suppliers? Corporate Ethics Is it ethical for large firms to unilaterally lengthen their payables periods, particularly when dealing with smaller suppliers? Payables Period Why don't all firms increase their payables periods to shorten their cash cycles? Payables Period BlueSky lengthened its payables period to "control costs and optimize cash flow." Exactly what is the cash benefit to BlueSky from this change?
Transcribed Image Text:LO3 16.3 LO2 16.4 LO1 16.5 Use the following information to answer Questions 16.6-16.10. Last month, BlueSky Airline announced that it would stretch out its bill payments to 45 days from 30 days. The reason given was that the company wanted to "control costs and optimize cash flow." The increased payables period will be in effect for all of the company's 4,000 suppliers. Page 551 LO1 16.6 What impact did this change in payables policy have on BlueSky's operating cycle? LO1 16.7 LO1 16.8 Sources and Uses For the year just ended, you have gathered the following information on the Holly Corporation: a. A $200 dividend was paid. b. Accounts payable increased by $500. c. Fixed asset purchases were $900. d. Inventories increased by $625. e. Long-term debt decreased by $1,200. Label each item as a source or use of cash and describe its effect on the firm's cash balance. Cost of Current Assets Kane Manufacturing, Inc., has recently installed a just-in-time (JIT) inventory system. Describe the effect this is likely to have on the company's carrying costs, shortage costs, and operating cycle. Cycles Is it possible for a firm's cash cycle to be longer than its operating cycle? Explain why or why not. LO1 16.9 LO1 16.10 Operating and Cash Cycles Its cash cycle? Operating and Cash Cycles What impact did the announcement have on BlueSky's suppliers? Corporate Ethics Is it ethical for large firms to unilaterally lengthen their payables periods, particularly when dealing with smaller suppliers? Payables Period Why don't all firms increase their payables periods to shorten their cash cycles? Payables Period BlueSky lengthened its payables period to "control costs and optimize cash flow." Exactly what is the cash benefit to BlueSky from this change?
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