1. avatar says

    Hi John, in your revision notes, there is sensitivity analysis, contribution, sales and scrap value are negative figures while faxed costs and initial cost are positive figures. Can you explain why the cash inflows have negative numbers and outflows have positive numbers in sensitivity analysis? thank you very much!

    • Profile photo of John Moffat says

      Because we are only worried if cash inflows fall (if they increase then it gets better and better!).

      With costs, we are worried if they increase (if they fall then it just makes the investment more attractive).

      That should make sense, but if not then do watch my free lecture on this.

      • avatar says

        i have asked about the Working Capital management regarding receivables and payables discount policy and cost / net benefit . similar question is there in december 2012 question number 2 KXP. i dont have any knowledge abt its format and trick to attempt this question , kindly provide me the link of any lecture regarding this, i need to know abt it From the scratch . it would be a great help if u provide me links to the appropriate lecture THANK YOU !

      • Profile photo of John Moffat says

        You asked about working capital as a discount topic. Working capital management is nothing to do with discounting.

        However there is a lecture about discount policy on receivables – there are lectures on all the chapter in the course notes. You can find the link to them on the main F9 page.

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