Calculate accounts receivable days for diamond enterprises

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In 2019, Diamond Enterprises has sales of $100 million, and the cost of goods sold of $40 million. At the end of 2019, Diamond Enterprises also has accounts receivable of $20 million, accounts payable of $25 million, and inventory of $15 million. Assume 365 days in a year.

(a) Calculate the accounts receivable days for Diamond Enterprises.

(b) A supplier has offered Diamond Enterprises trade credit terms of 3/15, net 60. Explain how to interpret the terms of credit. Calculate the effective annual rate. Assume the supplier sells the product for $100.

(c) Next year, Diamond Enterprises is considering switching to a supplier in Argentina, which uses Peso as its currency. Diamond Enterprises wants to estimate how the exchange rate will affect its costs. The spot exchange rate for Peso is 56.00 Peso/Dollar. The one-year interest rate in Australia is 1% and the one-year interest rate in Argentina is 7%. Based on these rates, what is the implied one-year forward exchange rate if markets are internationally integrated?

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Reference no: EM132806855

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