For Each of the Following Scenarios, Determine If It Is

question 15

Essay

For each of the following scenarios, determine if it is an indicator of potential cash flow problems:
$\begin{array}{|l|l|l|}\hline & & \text { Potential future cash } \\\hline & & \text { flow problems } \\\hline&&\text { Yes/No } \\\hline \text { a. } & \text { Growth in accounts receivable or inventories that is less the growth rate in sales. } & \\\hline \text { b. } & \text { Increase in accounts payable that exceed the increase in inventories. } & \\\hline \text { c. } & \text { Capital expenctitures that substentially exceed cash flow from operations. } & \\\hline \text { d. } & \text { Sales of marketable securities are less than purchases of marketable securities. } & \\\hline \text { e. } & \text { Other operating current liabilities that grow at alesser rate than sales. } & \\\hline \text { f. } & \text { A reduction or elinination of dividend payments } &\\\hline \text { g. } & \text { A substantial shirf from long-term borrowing to short-term borrowing. } &\\\hline\end{array}$

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Definitions:

General Factory

A term generally referring to the main production site where various goods are manufactured.

Activity-Based Costing

A method of accounting that recognizes and allocates expenses to overhead operations, before distributing those expenses to the products.

General Factory

Expenses related to the general operation of a manufacturing plant, not directly tied to specific units of production.

Activity-Based Costing

A costing method that assigns costs to products based on the activities needed to produce those products, aiming to provide more accurate product costing.