Required information [The following information applies to the questions displayed below.] Mears and Company has been operating for five years as an electronics component manufacturer specializing in cellular phone components. During this period, it has experienced rapid growth in sales revenue and in inventory. Mr. Mears and his associates have hired you as Mears's first corporate controller. You have put into place new purchasing and manufacturing procedures that are expected to reduce inventories by approximately one-third by year-end. You have gathered the following data related to the changes: (dollars in thousands) End of Year (projected) 393,310 Current Year (projected) $ 6,918,984 Beginning of Year $ 604,700 Inventory Cost of goods sold 2. What is the effect of the projected change in the inventory balance on cash flow from operating activities for the year. Effect of change in inventory A decrease in inventory will decrease the cash flow from operating activities. A decrease in inventory will increase the cash flow from operating activities. A decrease in inventory will not affect the cash flow from operating activities.
Required information [The following information applies to the questions displayed below.] Mears and Company has been operating for five years as an electronics component manufacturer specializing in cellular phone components. During this period, it has experienced rapid growth in sales revenue and in inventory. Mr. Mears and his associates have hired you as Mears's first corporate controller. You have put into place new purchasing and manufacturing procedures that are expected to reduce inventories by approximately one-third by year-end. You have gathered the following data related to the changes: (dollars in thousands) End of Year (projected) 393,310 Current Year (projected) $ 6,918,984 Beginning of Year $ 604,700 Inventory Cost of goods sold 2. What is the effect of the projected change in the inventory balance on cash flow from operating activities for the year. Effect of change in inventory A decrease in inventory will decrease the cash flow from operating activities. A decrease in inventory will increase the cash flow from operating activities. A decrease in inventory will not affect the cash flow from operating activities.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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