[skyelur]

Here is what I come up with... just wanted to be sure I was heading down the right track...

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:

[B]a. Paying out a $2 million cash dividend.

i. decrease cash
ii. Decrease net working capital

b. A customer paying a $2,500 bill resulting from a previous sale.

i. decrease cash
ii. No change to net working capital

c. Paying $5,000 previously owed to one of its suppliers.

i. decrease cash
ii. No change to net working capital

d. Borrowing $1 million long-term and investing the proceeds in inventory.

i. increase cash
ii. Increase net working capital

e. Borrowing $1 million short-term and investing the proceeds in inventory.

i. increase cash
ii. Increase net working capital

f. Selling $5 million of marketable securities for cash.

i. increase cash
ii. No change to net working capital

Thank you for any advice you may offer...

[Curlyben]

Please refer to this Announcement

[skyelur]

Please refer to this Announcement

I read the announcement and am now a bit more confused. I supplied the answers to the question... I did not ask for the answers, I simply asked was I heading in the right direction?

[CaptainForest]

A) Looks fine

B) A customer is paying you, so that would increase your cash, not decrease it. As for NWC, you are correct, there would be no change.

C) Looks fine

D) Looks fine

E) You are right, it would increase cash. However, since it is short term, both CA and CL would increase, therefore, no change in NWC

F) Looks fine

[skyelur]

Thank u CaptainForest. I see where I made the error on the short term investments. I'm finally getting the hang of this! I appreciate your guidance...

[CaptainForest]

You're welcome