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QUESTION
HE SALES PRICE EXCEEDS THE COST OF PRODUCING AND SELLING A UNIT OF OUTPUT, YET A DRAMATIC INCREASE IN SALES VOLUME CAUSES THE CASH BALANCE TO DECLINE?...
CAN YOU IMAGINE A SITUATION IN WHICH THE SALES PRICE EXCEEDS THE COST OF PRODUCING AND SELLING A UNIT OF OUTPUT, YET A DRAMATIC INCREASE IN SALES VOLUME CAUSES THE CASH BALANCE TO DECLINE? IN GENERAL, COULD A COMPANY LIKE COMPUTRON INCREASE SALES WITHOUT A CORRESPONDING INCREASE IN INVENTORY AND OTHER ASSETS? WOULD THE ASSET INCREASE OCCUR BEFORE THE INCREASE IN SALES, AND, IF SO, HOW WOULD THAT AFFECT THE CASH ACCOUNT AND THE STATEMENT OF CASH FLOWS?
