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Type your answer in the box. A firm has total receipts of $16,000, $20,000, & $18,000 and total payments of $12,000, $15,000, & $12,500, in January, February, & March, respectively. The firm's net cash flow for January is (round to the nearest dollar and include the dollar sign and commas, as appropriate) Do you know the answer? Read about this I know it Think so Unsure No idea
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7. A bank has a SME customer who is over-trading. While its sales and profit growth are impressively high, the firm's leverage and liquidity have been consistently eroded and have now reached a danger zone. Generous dividends continue to be paid. The bank is unwilling to extend more credit. The best solution(s) going forward would be: * Improve profitability o Improve asset efficiency by liquidating surplus assets (if any) Cut back dividends Reduce growth rate or invest growth equity capital O All of the above
Expert Solution
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Net cashflow = total receipts - total payments
= 16,000 - 12,000
= $4,000
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Answer:
Correct answer is option 2 i.e. improve asset efficiency by liquidating surplus asset.
This will bring sudden Cash to firm and increase liquidity.
Other options are not correct because
1-Profit is already high and it is not solving liquidity problem
3- Cutting dividend will have effect on shareholder yield
4-all of above is not correct
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