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A company offers terms of 2/20, net 45. Currently, 70% of all customers take advantage of the cash discount; the remainder pay bills at the due date. a. What will be the company's typical value for its receivable period? (Do not round accounts intermediate calculations.) b. What is the average investment in accounts receivable if annual sales are $36 million? (Use 365 days in a year. Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)

A company offers terms of 2/20, net 45. Currently, 70% of all customers take advantage of the cash discount; the remainder pay bills at the due date. a. What will be the company's typical value for its receivable period? (Do not round accounts intermediate calculations.) b. What is the average investment in accounts receivable if annual sales are $36 million? (Use 365 days in a year. Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter22: Providing And Obtaining Credit
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A company offers terms of 2/20, net 45. Currently, 70% of all customers take advantage of the cash discount; the remainder pay bills at the due date. a. What will be the company's typical value for its receivable period? (Do not round accounts intermediate calculations.) b. What is the average investment in accounts receivable if annual sales are $36 million? (Use 365 days in a year. Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)
Transcribed Image Text:A company offers terms of 2/20, net 45. Currently, 70% of all customers take advantage of the cash discount; the remainder pay bills at the due date. a. What will be the company's typical value for its receivable period? (Do not round accounts intermediate calculations.) b. What is the average investment in accounts receivable if annual sales are $36 million? (Use 365 days in a year. Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)
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