What was the cash flow effect of changes in inventory and receivable days for the company?

To understand the cash flow effect of changes in inventory and receivable days for a company, it is essential to grasp how inventory management and accounts receivable impact liquidity. Adjustments in inventory days and receivable days directly influence the cash available for operations and investments.

If the company has increased its inventory days, it means that it holds inventory for a longer period before it is sold. This creates a situation where cash is tied up in stock, meaning less cash is available for other operations. Conversely, if receivable days are longer, the company takes more time to receive payments from customers, which also strains cash flow.

In this scenario, the cash flow effect of changes in inventory days and receivable days amounted to a decrease of $1,000. This could signify that the combination of these factors—holding onto inventory longer and delaying cash collection from sales—resulted in an overall reduction in available cash for the company. Thus, the option indicating a cash flow effect of ($1,000) accurately reflects the negative impact on cash flow due to these changes.

Understanding this interplay between inventory and receivables is crucial for a construction estimator or anyone involved in financial analysis as it informs cash management and operational efficiency strategies.