21A company currently has the following accounts:⚫ Cash: $7,000Accounts Receivable (net): $11,000Short-Term Investment: $3,000Inventory: $3,000Current Liabilities: $5,000The company has just learned that a $4,000 accounts receivable will not be collectible.How will this change impact the current ratio?It will increase from 4.8 to 5.6.It will increase from 4.2 to 5.0.It will decrease from 4.8 to 4.0.hIt will decrease from 4.2 to 3.4.

Current Ratio = Current Assets / Current LiabilitiesCurrent Assets = Cash + Accounts Receivable +…

Answered: 21 A company currently has the…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 2P

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What is the receivable turnover?
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Axis Wells and Excavation (AWE) currently generates $198,000 in annual credit sales. AWE sells on terms of net 50, and its accounts receivable balance averages $11,000. AWE is considering a new credit policy with terms of net 25. Under the new policy, sales will decrease to $189,000, and accounts receivable will average $12,600. Compute the days sales outstanding (DSO) under the existing policy and the proposed policy. Assume there are 360 days in a year. Round your answers to the nearest whole number. DSOExisting: days DSONew: days
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