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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
During a meeting of the management committee of Edsel Corporation, a number of proposals are made to alleviate its weak cash position and improve income. Evaluate and comment on both the immediate and long-term effects of the following proposals on the measures indicated. Indicate increase ([1]), decrease (), or no effect (NE).
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EFFECT ON |
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Proposal |
Net Income |
Cash from Operations |
Cash Position |
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1. Substitute stock dividends for cash dividends. |
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2. Delay needed capital expenditures. |
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3. Reduce repair and maintenance outlays. |
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4. Increase the provision for depreciation: |
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a. For GAAP books only. |
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b. For tax only. |
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c. For both GAAP books and tax. |
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5. Require earlier payment from clients. |
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6. Delay payment to suppliers and pass up cash discounts. |
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7. Borrow money short term. |
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8. Switch from sum-of-the-years"-digits to straight-line depreciation for books only. |
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9. Pressure dealers to buy more. |
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10. Reduce funding of pension plan to the minimum legal level. |
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11. Reduce inventories by implementing a just-in-time inventory system. |
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12. Sell trading securities that have declined by $1,000 in the current period but are still valued at $3,000 above cost. |
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13. Reissue treasury shares. |
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