Year 5 has ) cash receipts from inventory, AR and no AP. Why

Share With

Year 5 has ) cash receipts from inventory, AR and no AP. Why are you using the numbers from year 4?

I can't quite follow this reasoning.

Particulars	Year 5
Before tax cost savings	$83,000
Depreciation	$73,000
Cash receipts from receivables	$150,000
Cash receipts from sale of inventory	$300,000
Cash payments for payables	$(180,000)
Taxes	$(24,900)
Operating cash flows	$401,100

Does this solution look reasonable:
I used this to calculate NWC

Then did this...

Problem 3 YR 5

Savings of labour cost in year 2

Problem 3 YR 5
Savings of labour cost in year 2	$83,000.00
Increase in depreciation	$73,000.00	Depreciation on new machine - Depreciation on old machine
Incremental profit before tax	$10,000.00	Savings + increase in depreciation
Tax at 30%	$3,000.00
Incremental profit after tax	$7,000.00
Increase in depreciation add back	$73,000.00
Change in working capital	$180,000.00
Relevant cashflows	$-100,000.00	Incremental profit after tax + increase in depreciation - changes in working capital

Related Questions