If Woolworths Decides to Offer a Line of Groceries at Its

question 79

Multiple Choice

If Woolworths decides to offer a line of groceries at its discount retail outlet,inventories are expected to increase by $1,200,000,accounts receivable by $300,000 and accounts payable by $500,000.What is the cash outflow for working capital requirements?

• A)$2,000,000
• B)$1,700,000
• C)$1,500,000
• D)$1,000,000

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Definitions:

Operating Income

Earnings before interest and taxes (EBIT), representing the profit a company generates from its core operations.

Income Tax Expense

The amount of money that an individual or corporation owes to the government based on their taxable income.

Effective Income Tax Rate

The average rate at which an individual or corporation is taxed, calculated by dividing the total tax expense by the taxable income.

Cash Dividends

Payments made by a corporation to its shareholders as a distribution of profits, typically in the form of cash.