Question: Your company received a $7 million order on the last day of the year. You filled the order with $3 million worth of inventory. The customer picks up the order the same day and pays $2 million up front in cash; you also issue a bill for the customer to pay the remaining balance of $5 million within 40 days. Suppose your firm's tax rate is 0% (ignore taxes). Determine the consequences of this transaction for each of the following:
Revenues - (increase/decrease/no effect). value of effect?
Earnings - (increase/decrease/no effect). value of effect?
Receivables - (increase/decrease/no effect). value of effect?
Inventory - (increase/decrease/no effect). value of effect?
Cash - (increase/decrease/no effect). value of effect?