Working Capital Management. Indicate how each of the following six different transactions that Dynamic Mattress might make would affect (i) cash and (ii) net working capital:

a. Paying out a $2 million cash dividend.
b. A customer paying a $2,500 bill resulting from a previous sale.
c. Paying $5,000 previously owed to one of its suppliers.
e. Borrowing $1 million long-term and investing the proceeds in inventory.
f. Selling $5 million of marketable securities for cash.

horvatma

a. Paying out a $2 million cash dividend. decrease cash, decrease net working cap
b. A customer paying a $2,500 bill resulting from a previous sale. increase cash, increase net working cap
c. Paying $5,000 previously owed to one of its suppliers. decrease cash, decrease net working cap decrease cash, no change in net working cap
e. Borrowing $1 million long-term and investing the proceeds in inventory. increase cash, increase net working cap
f. Selling $5 million of marketable securities for cash. increase cash, increase net working cap

horvatma

a. decrease cash, decrease net working cap
b. increase cash, increase net working cap
c. decrease cash, no change in net working cap
e. increase cash, increase net working cap
f. increase cash, increase net working cap

horvatma

a. decrease cash, decrease net working cap
b. increase cash, increase net working cap
c. decrease cash, no change in net working cap
e. increase cash, increase net working cap
f. increase cash, increase net working cap