Estimate accounts receivable on the Balance Sheet (in the spreadsheet Table 5-3 tab) and changes in working capital on the Cash Flow Statement due to increases or decreases in accounts receivable. Consider the factor below: Need for external financing (Internal factor)

Forecasting cash available from operations allows a company to determine how much working capital is available to manage daily operations, such as investment in inventory and to fund long-term investments in buildings and machinery. Every company must determine the best way to allocate its limited resources to implement its strategies and invest in projects that produce the greatest return on investment.
Scenario: Assume that the year 20×1 for Boston Retail is the most recent concluded calendar year. Therefore, 20×2 is the forecast calendar year. A spreadsheet model based on the Boston Retail case is provided. Forecast Operating Cash Flow by completing the following steps:
1. Estimate accounts receivable on the Balance Sheet (in the spreadsheet Table 5-3 tab) and changes in working capital on the Cash Flow Statement due to increases or decreases in accounts receivable. Consider the factor below:
Need for external financing (Internal factor)
2. Estimate inventory on the Balance Sheet (in the spreadsheet Table 5-3 tab) and changes in working capital on the Cash Flow Statement due to increases or decreases in inventory. Consider factors below:
Potential stock outs due to delivery interruptions (Internal factor)
Ability to accurately forecast sales (Internal factor)
Fluctuations due to seasonal or promotional effects (Internal factor)
3. Estimate accounts payable on the Balance Sheet (in the spreadsheet Table 5-3 tab) and changes in working capital on the Cash Flow Statement due to increases or decreases in accounts payable. Consider the factor below:
Ability to negotiate longer payment terms with suppliers (Internal factor)
4. Estimate financing needs and interest payments. This last step estimates the funds needed to finance working capital increases, the purchase of new capital equipment, and the repayment of debt and interest. Consider factors such as:
Prevailing interest rates (External factor)
Types of loans available (External factor)
e.g., bonds, line of credit, bank loans, asset financing options, etc.
Ability to forecast cash flows and dependence on flexible financing options (Internal factor)
(For steps 1-4, you may use the estimated numbers that are already on the spredsheet to complete step 5)
5. Create a written discussion describing your spreadsheet analysis and justification of your results. Your analysis must include all of the items identified below:
Explanation and justification of the accounts receivable forecast and interpret the results
Explanation of how you estimated the accounts receivable level on the balance sheet, including each internal factor you considered
Explanation of why an increase in accounts receivable on the Balance Sheet is reflected as a negative number on the Cash Flow Statement and a decrease in accounts receivable is reflected as a positive number on the Cash Flow Statement
Explanation and justification of the Inventory forecast and interpret the results Explanation of how you estimated the inventory level on the balance sheet, including each internal factor that you considered
Explanation of why an increase in inventory on the Balance Sheet is reflected as a negative number on the Cash Flow Statement and a decrease in inventory is reflected as a positive number on the Cash Flow Statement Explanation and justification of the accounts payable forecast in and interpret the results
Explanation of how you estimated the accounts payable level on the balance sheet, including each internal factor you considered
Explanation of why an increase in accounts payable on the Balance Sheet is reflected as a positive number on the Cash Flow Statement and a decrease in accounts payable is reflected as a negative number on the Cash Flow Statement
Explanation of how you estimated interest expense on the income statement and bank loans on the balance sheet, including each external/internal factor you considered
Analysis of the cash flows for the company
Explanation of why your profit on the Income Statement differs from cash from operations on the Cash Flow Statement
Explanation of the source(s) of the cash for the new capital project and planned debt repayments
Requirements
The excel spreadsheet model must be submitted with the written analysis Required data entered in appropriate cells.
Citation Requirements: 3 scholarly resources
Word Count: 750 words minimum
APA Formatting
Plagiarism Submission