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FIN3702 Assignment 1 Semester 1
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  • FIN3702 - Working Capital Management
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  • University Of South Africa

FIN3702 Assignment 1 Semester 1 1. 3 Textbook reference, 2010 edition: chapter 3, page 95 Textbook reference, 2014 edition: chapter 4, page 108 Operating activities are the functions of a business directly related to providing its goods and/or services to the market. These are the company's co...

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  • August 26, 2022
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  • 2022/2023
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  • fin3702 assignment 1 semester 1

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  • University of South Africa
  • FIN3702 - Working Capital Management
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FIN3702 Assignment 1 Semester 1

, 1. 3

Textbook reference, 2010 edition: chapter 3, page 95

Textbook reference, 2014 edition: chapter 4, page 108

Operating activities are the functions of a business directly related to providing its goods
and/or services to the market. These are the company's core business activities, such as
manufacturing, distributing, marketing, and selling a product or service. Operating
activities will generally provide the majority of a company’s cash flow and largely
determine whether it is profitable. Some common operating activities include cash
receipts from goods sold, payments to employees, taxes, and payments to suppliers.
These activities can be found on a company's financial statements, and in particular the
income statement and cash flow statement.




2. 4

Textbook reference, 2010 edition: chapter 3, page 96
Textbook reference, 2014 edition: chapter 4, page 110

If accounts receivable increased from one year to the next, the implication is that more
people paid on credit during the year, which represents a drain on cash for the company,
as some of the revenues that came in during the year increased the accounts receivable
balance instead of cash.

Conversely, if accounts receivable decreased from one year to the next, the implication
is that those old accounts receivable were collected (i.e., credit sales were eventually
converted into cash sales), representing cash inflow for the company.

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