What will be the level of accounts receivable change

Reference no: EM132634125

Question 1.) Ferrell Inc. recently reported net income of $8 million. It has 720,000 shares of common stock, which currently trades at $55 a share. Ferrell continues to expand and anticipates that 1 year from now, its net income will be $12.8 million. Over the next year, it also anticipates issuing an additional 252,000 shares of stock so that 1 year from now it will have 972,000 shares of common stock. Assuming Ferrell's price/earnings ratio remains at its current level, what will be its stock price 1 year from now? Do not round intermediate calculations. Round your answer to the nearest cent.

Question 2.) Ingraham Inc. currently has $500,000 in accounts receivable, and its days sales outstanding (DSO) is 44 days. It wants to reduce its DSO to 20 days by pressuring more of its customers to pay their bills on time. If this policy is adopted, the company's average sales will fall by 10%. What will be the level of accounts receivable following the change? Assume a 365-day year. Do not round intermediate calculations. Round your answer to the nearest cent.

Reference no: EM132634125

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