During a meeting of the management committee of Edsel Corporation, a number of proposals are made to alleviate its weak cash position and improve income. Evaluate and comment on both the immediate and long-term effects of the following proposals on the measures indicated. Indicate increase ([1]), decrease (), or no effect (NE).
| EFFECT ON | |||
| Proposal | Net Income | Cash from Operations | Cash Position |
| 1. Substitute stock dividends for cash dividends. | |||
| 2. Delay needed capital expenditures. | |||
| 3. Reduce repair and maintenance outlays. | |||
| 4. Increase the provision for depreciation: | |||
| a. For GAAP books only. | |||
| b. For tax only. | |||
| c. For both GAAP books and tax. | |||
| 5. Require earlier payment from clients. | |||
| 6. Delay payment to suppliers and pass up cash discounts. | |||
| 7. Borrow money short term. | |||
| 8. Switch from sum-of-the-years”-digits to straight-line depreciation for books only. | |||
| 9. Pressure dealers to buy more. | |||
| 10. Reduce funding of pension plan to the minimum legal level. | |||
| 11. Reduce inventories by implementing a just-in-time inventory system. | |||
| 12. Sell trading securities that have declined by $1,000 in the current period but are still valued at $3,000 above cost. | |||
| 13. Reissue treasury shares. | |||
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