Company average accounts receivable

Assignment Help Finance Basics
Reference no: EM132557364

1) Williams & Sons last year reported sales of $36 million, cost of goods sold (COGS) of $28 million, and an inventory turnover ratio of 4. The company is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 7 while maintaining the same level of sales and COGS, how much cash will be freed up? Do not round intermediate calculations. Enter your answer in dollars. For example, an answer of $1.23 million should be entered as 1,230,000,000. Round your answer to the nearest dollar.

2)Medwig Corporation has a DSO of 32 days. The company averages $4,000 in sales each day (all customers take credit). What is the company's average accounts receivable? Assume a 365-day year. Round your answer to the nearest dollar.

3)What are the nominal and effective costs of trade credit under the credit terms of 1/10, net 40? Assume a 365-day year. Do not round intermediate calculations. Round your answers to two decimal places.
Nominal cost of trade credit:
Effective cost of trade credit:

4)A large retailer obtains merchandise under the credit terms of 1/10, net 40, but routinely takes 65 days to pay its bills. (Because the retailer is an important customer, suppliers allow the firm to stretch its credit terms.) What is the retailer's effective cost of trade credit? Assume a 365-day year. Do not round intermediate calculations. Round your answer to two decimal places.

5)A chain of appliance stores, APP Corporation, purchases inventory with a net price of $500,000 each day. The company purchases the inventory under the credit terms of 1/15, net 30. APP always takes the discount but takes the full 15 days to pay its bills. What is the average accounts payable for APP? Round your answer to the nearest dollar.


6) Snider Industries sells on terms of 2/10, net 25. Total sales for the year are $1,000,000. Thirty percent of customers pay on the 10th day and take discounts; the other 70% pay, on average, 30 days after their purchases. Assume a 365-day year.
A)What is the days sales outstanding? Do not round intermediate calculations. Round your answer to the nearest whole number.
B)What is the average amount of receivables? Do not round intermediate calculations. Round your answer to the nearest dollar.
C) What would happen to average receivables if Snider toughened its collection policy with the result that all nondiscount customers paid on the 25th day? Do not round intermediate calculations. Round your answer to the nearest dollar.

7)Calculate the nominal annual cost of trade credit under each of the following terms. Assume a 365-day year. Do not round intermediate calculations. Round your answers to two decimal places.

-1/15, net 20. =
-2/10, net 60. =
-3/10, net 55. =
-2/10, net 55. =
-2/15, net 35. =

Reference no: EM132557364

Questions Cloud

What management wants investors and creditors to see : Even though firms follow the accounting rules (GAAP) when presenting their financial statements, it is still possible for conflicts of interest to exist.
What is margaret saving rate : Margaret earns $4500 per month. After payroll deductions from the government, Margaret takes home 75 percent of her salary.
Correspondent bank relationship : A correspondent bank relationship is established when two banks maintain deposits with one another.
Describe the quality issues related to reporting revenue : Referencing this week's readings and lecture, describe the quality issues related to reporting revenue. What is the importance of understanding various.
Company average accounts receivable : Williams & Sons last year reported sales of $36 million, cost of goods sold (COGS) of $28 million, and an inventory
Explain what the staff should expect the auditors to do : Auditors have come into a department as part of a company-wide audit prior to issuing an audit opinion for the company's financial reports.
What is the current share price : Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 20 percent for the next three years, with the growth
How much will be paid by the insurance company : Your individual health policy has a deductible of $100 on the first $500 claim and a 25 percent coinsurance on any remaining claim
What can creditors and other users glean from an analysis : Referencing this week's readings and lecture, describe the following terms as they relate to the statement of cash flows: cash, operating activities, investing.

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd