Indicate how you would expect the following strategies to affect the company’s net cash flows from operating activities (1) in the near future and (2) in later periods (after the strategy’s long-term effects have “taken hold”). Fully explain your reasoning. a. A successful pharmaceutical company substantially reduces its expenditures for research anddevelopment.b. A restaurant that previously sold only for cash adopts a policy of accepting bank credit cards,such as Visa and MasterCard.c. A manufacturing company reduces by 50 percent the size of its inventories of raw materials(assume no change in inventory storage costs).d. Through tax planning, a rapidly growing real estate developer is able to defer significantamounts of income taxes.e. A rapidly growing software company announces that it will stop paying cash dividends for theforeseeable future and will instead distribute stock dividends.
Indicate how you would expect the following strategies to affect the company’s net
from operating activities (1) in the near future and (2) in later periods (after the strategy’s long-
term effects have “taken hold”). Fully explain your reasoning.
a. A successful pharmaceutical company substantially reduces its expenditures for research and
development.
b. A restaurant that previously sold only for cash adopts a policy of accepting bank credit cards,
such as Visa and MasterCard.
c. A manufacturing company reduces by 50 percent the size of its inventories of raw materials
(assume no change in inventory storage costs).
d. Through tax planning, a rapidly growing real estate developer is able to defer significant
amounts of income taxes.
e. A rapidly growing software company announces that it will stop paying cash dividends for the
foreseeable future and will instead distribute stock dividends.
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