Accounting for Managers: Cash Cycle, Proposal Analysis, and Special Order Quotation

ACCOUNTING FOR MANAGERS
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Question 1
Formula for cash cycle is illustrated below (Arnold, 2015).
Cash cycle for the selected company i.e. JB Hi Fi is as illustrated below (JB Hi-Fi, 2017).
The relevant extract taken from the latest annual report of JB Hi Fi pertaining to statement of
cash flows is given as follows (JB Hi-Fi, 2017).
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With regards to cash flows from operating activities, there is an increase to the tune of $ 5
million in FY2017 over FY2016. The prime contributing factor is the healthy growth in customer
receipts (owing to acquisition of Good Guys) which despite the corresponding increase in
payment to suppliers and employees has led to improved operational cash flows in FY2017. This
is emphasized from the fact that despite an increase in the tax outflow to the tune of $ 32 million
in FY2017, the net cash flows from operations have shown a jump. The net cash outflow from
investing activities has jumped tremendously in FY2017 owing to the $ 870 million acquisition
of Good Guys by the company in FY2017. Further, the effect of the acquisition has been
witnessed in cash flows from financing activities as well as the company has raised about $ 850
million through a combination of debt and equity (JB Hi-Fi, 2017).
Question 2
Proposal 1: Enhance the product quality that result in rise in sale of the product volume by 30%
with the increase in the variable cost and advertisement cost of $28 and $30,000 respectively.
Analysis
 Quantitative analysis shows the increment in the profit via proposal plan.
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