What is the firm average collection period

Assignment Help Finance Basics
Reference no: EM131493281

Trinity Surgical Supplies, Inc. sells on terms of 2/10, net 30. Gross sales for the year are $1.5 million, and the collections department estimates that 25 percent of the customers pay on the tenth day and take discounts; 50 percent pay on the thirtieth day; and the remaining 25 percent pay, on average, 40 days after the purchase. (Assume 360 days per year.)

a. What is the firm's average collection period?

b. What is the firm's current receivables balance?

c. What would be the firm's new receivables balance if Trinity Surgical toughened up on its collection policy, with the result that all nondiscount customers paid on the 30th day?

d. Suppose that the firm's cost of carrying receivables was 10 percent annually. How much would the toughened credit policy save the firm in annual receivables carrying expense? (Assume that the entire amount of the receivables had to be financed.)

Reference no: EM131493281

Questions Cloud

How much should they set aside monthly to afford the remodel : Tim and Denise just bought a very old house.how much should they set aside monthly to afford the remodel in 10 years?
Explain the operation of the detector : In order to detect (demodulate) an AM signal, we can multiply it by the LO waveform and apply the result to a low-pass filter.
What is the bond current market price : What is the bond's current market price?
Describe possible lan topologies that could be used : Explain troubleshooting approaches to network problems for informing potential solutions to network errors and ensuring rapid resolution.
What is the firm average collection period : a. What is the firm's average collection period? b. What is the firm's current receivables balance?
Japanese yen is trading at forward discount relative : The Japanese yen is trading at a forward discount relative to the U. S. dollar.
Discuss three general approaches to forecasting : Briefly discuss the three general approaches to forecasting. Why is forecasting important?
What is the bpsk signal : Repeat the above problem for the BPSK signal expressed by Equation.
What rate of return would she have earned for past year : Last year Janet purchased $1,000 face value corporate bond with 12% annual coupon rate and 25-year maturity. rate of return would she have earned for past year.

Reviews

Write a Review

Finance Basics Questions & Answers

  What decision criteria should managers use in selecting

1.what decision criteria should managers use in selecting projects when there is not enough capital to invest in all

  The following grammar defines lists of lists of literals

The following grammar defines lists of lists of literals. The interpreration of symbols is the same as that for the grammar of fig. 6.3 witb the addition of the type list. which indicates a list of elements of the type T that follows

  Ups has a beta of 12 and walmart has a beta of 08 the

ups has a beta of 1.2 and walmart has a beta of 0.8. the risk-free rate of interest is 4 and the market risk premium is

  Explain how firms can benefit from forecasting exchange rate

Explain how firms can benefit from forecasting exchange rates? Describe common techniques used for forecasting. Explain how interval forecasts can be applied?

  What are the firm''s major strengths and weaknesses

Use the DuPont equation to provide a summary and overview of D'Leon's financial condition as projected for 2009. What are the firm's major strengths and weaknesses?

  What is the dollar amount of each semiannual coupon payment

A bond has a par value of $1000 and currently sells for $987. The bond's coupon rate is 7.9% and coupon payments are made semiannually. What is the dollar amount of each semiannual coupon payment? Round to the nearest dollar.

  The time clock co is trying to decide which one of two

the time clock co. is trying to decide which one of two projects it should accept. both projects have the same start-up

  Explain the significance of statement

An organization that does not invest in its employees may be less attractive to prospective employees and may have a more difficult time retaining current employees"

  Difference between an asset purchase and a stock purchase

What is the difference between an asset purchase and a stock purchase?- What is the difference between an operational restructuring and a financial restructuring?

  Define a new random variable

Suppose you have a distribution, X, with mean = 29 and standard deviation = 6. Define a new random variable Y = 4X - 5. Find the mean and standard deviation of Y.

  What is the afn for the coming year

Based on the AFN equation, what is the AFN for the coming year? Dollars are in millions.

  Great art as a benchmark of great civilizations

Art and government.Throughout history we see great art as a benchmark of great civilizations.Egypt,China,Rome,all known as much for their art as for their army.What is government's place in allowing,and helping that art to be created?Keep in mind,‘he..

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