Six Twelve, Inc., is considering opening up a new convenience store in downtown New York City. The expected annual revenue at the new store is $700,000. To estimate the increase in working capital, analysts estimate the ratio of cash and cash-equivalents to revenue to be 0.03 and the ratios of receivables, inventories, and payables to revenue to be 0.05, 0.10, and 0.04, respectively, in the same industry.
Required:
What is the expected incremental cash flow related to working capital when the store is opened? (Enter negative amount using either a negative sign preceding the number e. g. - 45)
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