Question

In: Finance

Company X has credit sales of $189,000 Annual credit terms of net 30 days, Collection period...

Company X has credit sales of $189,000

Annual credit terms of net 30 days,

Collection period is 30 days.

3/10 discount worth it?

Cash generated used for bank loans of 12%

3/10 discount causes 23% increase in sales

Profit of 15%

what is the change in annual income?

Take offer?

Solutions

Expert Solution

pls find attached answers

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Maddox Resources has credit sales of $196,000 yearly with credit terms of net 30 days, which...
Maddox Resources has credit sales of $196,000 yearly with credit terms of net 30 days, which is also the average collection period. Maddox does not offer a discount for early payment, so its customers take the full 30 days to pay. (Use 365 days in a year.) a-1. What is the average receivables balance? (Do not round intermediate calculations. Round the final answer to nearest whole dollar.) Accounts receivable balance           $ 16109.59 a-2. What is the receivables turnover? (Round...
Maddox Resources has credit sales of $185,000 yearly with credit terms of net 30 days, which...
Maddox Resources has credit sales of $185,000 yearly with credit terms of net 30 days, which is also the average collection period. Maddox does not offer a discount for early payment, so its customers take the full 30 days to pay. (Use 365 days in a year.) a-1. What is the average receivables balance? (Do not round intermediate calculations. Round the final answer to nearest whole dollar.) Accounts receivable balance           $ a-2. What is the receivables turnover? (Round the...
Maddox Resources has credit sales of $193,000 yearly with credit terms of net 30 days, which...
Maddox Resources has credit sales of $193,000 yearly with credit terms of net 30 days, which is also the average collection period. Maddox does not offer a discount for early payment, so its customers take the full 30 days to pay. (Use 365 days in a year.) a-1. What is the average receivables balance? (Do not round intermediate calculations. Round the final answer to nearest whole dollar.) Accounts receivable balance           $ a-2. What is the receivables turnover? (Round the...
Maddox Resources has credit sales of $193,000 yearly with credit terms of net 30 days, which...
Maddox Resources has credit sales of $193,000 yearly with credit terms of net 30 days, which is also the average collection period. Maddox does not offer a discount for early payment, so its customers take the full 30 days to pay. (Use 365 days in a year.) a-1. What is the average receivables balance? (Do not round intermediate calculations. Round the final answer to nearest whole dollar.) Accounts receivable balance           $ a-2. What is the receivables turnover? (Round the...
Aurora Corporation has annual credit sales of $1,200,000 with credit terms of 45 days and an...
Aurora Corporation has annual credit sales of $1,200,000 with credit terms of 45 days and an average collection period of 40 days with no discount. In the current economy Aurora has fallen upon tough times and is looking for ways improve cash flow, so the company is considering a changing their collection policy to 1/10 net 30. They estimate 50% of customers will take advantage of the discount and the average collection period will be 28 days. With the change...
A company has 60,000 in sales per day and sells on credit terms of NET 30....
A company has 60,000 in sales per day and sells on credit terms of NET 30. Its current receivables booking practices record the invoices immediately on the day the sale occurs. The firm's average collection experiences indicate that its typical customer pays by check, and the remittance is received at the firm's central processing location 50 days after the invoicing of the sale. Given the efficiency of the central processing center customer accounts are credited on the following day (51)....
A firm has days' sales in an inventory of 105 days, an average collection period of...
A firm has days' sales in an inventory of 105 days, an average collection period of 35 days, and takes 42 days, on average, to pay its accounts payable. Taken together, what do these three figures imply about the firm's operations and its cash flows?
Dome Metals has credit sales of $180,000 yearly with credit terms of net 60 days, which...
Dome Metals has credit sales of $180,000 yearly with credit terms of net 60 days, which is also the average collection period.      a. Assume the firm offers a 3 percent discount for payment in 18 days and every customer takes advantage of the discount. Also assume the firm uses the cash generated from its reduced receivables to reduce its bank loans which cost 12 percent. What will the net gain or loss be to the firm if this discount...
Trix Company sells to grocery stores on credit terms of "net 60." Annual credit sales are...
Trix Company sells to grocery stores on credit terms of "net 60." Annual credit sales are $11 million (spread evenly throughout the year) and its accounts average 10 days overdue. The firm's variable cost ratio is 0.75 (i.e., variable costs are 75% of sales). Suppose that Trix's sales are expected to increase by 32% next year. Determine the firm's average investment in receivables for next year under these conditions. Enter your answers in millions and round to the second decimal...
Stevens Company presents the following information: Current annual credit sales : $24,000,000 Collection period : 3...
Stevens Company presents the following information: Current annual credit sales : $24,000,000 Collection period : 3 months Terms : net/30 Rate of return : 18% The company is considering offering a 4/10, net/30 discount. It anticipates that 30 percent of its customers will take advantage of the discount. The collection period is expected to decrease to 2 months. How much is the net advantage/disadvantage of the planned discount policy? Should the discount policy be implemented?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT