Business life cycle and operating cash flow
Instructions
Upon completion of the Required Readings, write a thorough, well-planned narrative answer to the following discussion question. Rely on your Required Readings and the Lecture and Research Update for specific information to answer the discussion question, but turn to your original thoughts when asked to apply, evaluate, analyze, or synthesize the information. Your Discussion Question responses should be both grammatically and mechanically correct and formatted in the same fashion as the questions themselves. If there is a Part A, your response should identify a Part A, etc. In addition, you must appropriately cite all resources used in your responses and document them in a bibliography using APA style.
The Assignment
Business life cycle and operating cash flow influence corporate debt levels. A mature manufacturer, for instance, tends to have a greater proportion of long-term liabilities than a computer software developer. In relation to this maxim, discuss the following queries. (20 points) (A 1½-page response is required.)
a. Citing examples, discuss why some businesses require greater amounts of long-term debt than other types of businesses.
b. Explain the relationship between life cycle stage and long-term debt.
c. Describe the importance of cash flow projections relative to debt financing.
Textbook Readings
Bergevin, P. M. (2002). Financial statement analysis: An integrated approach. Upper Saddle River, NJ: Prentice Hall. Chs. 14-15, pp. 296-345.
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