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Finance Sep 18, 2020
  1. 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

  2. 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

  1. Net cashflow = total receipts - total payments

    = 16,000 - 12,000

    $4,000

  2. 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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