Consider the pattern in following selected year end data for Landsdowne Company.
|
Year |
1 |
2 |
3 |
4 |
5 |
6 |
|
Cash flow from operating activities |
$20,000 |
$25,000 |
$18,000 |
$12,000 |
$6,000 |
$2,000 |
|
Receivables |
35,000 |
37,000 |
42,000 |
45,000 |
50,000 |
53,000 |
|
Inventory |
70,000 |
76,000 |
80,000 |
84,000 |
86,000 |
90,000 |
|
Payables |
24,000 |
28,000 |
32,000 |
46,000 |
57,000 |
66,000 |
|
Net income |
50,000 |
53,000 |
55,000 |
59,000 |
63,000 |
55,000 |
Provide an explanation for the changes over the six year period. Year 6 is the most recent year. What difficulties do you believe the company is facing?