Demonstrate college-level communication through the composition of original materials in Standard English.
In this assignment, you will prepare a business letter to share your advice with the chief financial officer (CFO) of a company. You will explain complex financial data and discuss the cause and effect of select accounting transactions on cash balances.
Read the fictional scenario and respond to the checklist items.
Scenario:
The CFO, Karl Richland, of Semtell Company in Cincinnati, Ohio, is asking for your advice. The CFO explains sales are increasing, but there is a constant matter of not having enough cash to meet payroll or pay vendors within 30 days.
Checklist: Using the information in the company’s cash flow statement, prepare an informational business letter to the CFO explaining the seven items listed below. Note: There is no actual cash flow statement for you to look at, but you must write the letter based on your understanding of the cash flow statement and what represents the sources and uses of cash.
1. Explain why cash can go down even when sales are up.
2. Explain how increases in accounts receivables and inventory balances affect cash flows within a company.
3. Explain what effect increases or decreases in asset and liability accounts have on cash flow.
4. Explain how changes in accounts payable balances impact cash flows.
5. Recommend a possible solution for the company’s shortage of working capital.
6. Your informational business letter should:
o Use the accepted business letter format and example as provided above.
o Utilize Standard English and use correct spelling and grammar.
o Provide a clearly established and sustained viewpoint and purpose.
o The writing should be well ordered, logical, and unified, as well as original and insightful.
o Include at least one scholarly, high-quality, and current Purdue Global Library source and/or your textbook.