boken kap 26 del 1 Flashcards
1
Q
- Why are short-term operating activities considered unsynchronized?
A
Because payment for raw materials does not occur at the same time as cash is received from selling the product.
2
Q
- Why are short-term operating activities considered uncertain?
A
Because future sales and costs are not known with certainty.
3
Q
- What does the cash flow timeline consist of?
A
An operating cycle and a cash cycle.
4
Q
- What is the inventory period?
A
The period required to order raw materials, produce, and sell the product.
5
Q
- What is the accounts receivable period?
A
The period required to collect cash receipts from customers.
6
Q
- How does a flexible policy affect future cash inflows?
A
Future cash inflows are larger with a flexible policy.
7
Q
- What are current assets?
A
Cash and assets expected to turn into cash within a year.
8
Q
- What is short-term debt?
A
Current liabilities, or obligations expected to require cash payment within one year.
9
Q
- How does an increase in non-current liabilities affect cash?
A
It leads to an increase in cash.
10
Q
- What leads to an increase in cash besides an increase in non-current liabilities?
A
A decrease in net working capital (NWC) or non-current assets.
11
Q
- How is net working capital (NWC) defined?
A
NWC = Cash + Other Current Assets.
11
Q
- What is the relationship between cash, non-current liabilities, equity, and NWC?
A
Cash + Non-current Liabilities + Equity = NWC (excluding cash) – Non-current Assets.
