Answer? ? General Accounting GreenTech Electronics sells to retail computer stores on creditterms of "net 45." Annual credit sales are $240 million (spreadevenly throughout the year), and its accounts average 35 daysoverdue. The firm's variable cost ratio is 0.70 (i.e., variable costsare 70 percent of sales). When converting from annual to dailydata or vice versa, assume there are 365 days per year.Determine GreenTech's average collection period.

Step 1: Define Average Collection PeriodThe Average Collection Period measures the total time a…

Answered: GreenTech Electronics sells to retail…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter18: The Management Of Accounts Receivable And Inventories

Section: Chapter Questions

Problem 1P

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Negus Enterprises has an inventory conversion period of 50 days, an average collection period of 35 days, and a payables deferral period of 25 days. Assume that cost of goods sold is 80% of sales. What is the length of the firm’s cash conversion cycle? If annual sales are $4,380,000 and all sales are on credit, what is the firm’s investment in accounts receivable? How many times per year does Negus Enterprises turn over its inventory?
ABC is deciding if credit should be extended to its customers. It has determined that there is a 95% probability that it would collect the full payment from a credit sale in one month. The receivable is financed at an APR of 7.10%. On credit sales of $3,000 per unit, the present value of costs are expected to be 84.50% of the sales price. What is the present value of the expected profit on the sale of each unit? Explain with all steps a.-$16.76 b.-$166.76 c.$126.06 d.$254.90 e.$298.24
Suppose that LilyMac Photography has annual sales of $230,000, cost of goods sold of $165,000, average inventories of $4,500, and average accounts receivable of $25,000. Assume that all of LilyMac's sales are on credit. What will be the firm's operating cycle? (Use 365 days a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Suppose that Dunn Industries has annual sales of $4.07 million, cost of goods sold of $1,720,000, average inventories of $1,075,000, and average accounts receivable of $744,000. Assume that all of Dunn's sales are on credit. What will be the firm's operating cycle? (Use 365 days a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Cost of goods sold of $1,72,000,
Greene Sisters has a DSO of 20 days. The company's average daily sales are $30,000. What is the level of its accounts receivable? Assume there are 365 days in a year. Round your answer to the nearest dollar.
Calculate Average Payables Periods For the first year, Hawkeye, Inc., has a cost goods sold of $95,318. At the end of the year, the accounts payable balance was $22,816. How long, on average, did it take the company to pay off its suppliers during the year? What might a large value for this ratio imply?
Cost of Trade Credit Grunewald Industries sells on terms of 2/10, net 50. Gross sales last year were $4,526,000 and accounts receivable averaged $434,000. Half of Grunewald's customers paid on the 10th day and took discounts. What are the nominal and effective costs of trade credit to Grunewald's nondiscount customers? (Hint: Calculate daily sales based on a 365-day year, calculate the average receivables for discount customers, and then find the DSO for the nondiscount customers.) Do not round intermediate calculations. Round your answers to two decimal places. Nominal cost of trade credit: % Effective cost of trade credit: %
Axis Wells and Excavation (AWE) currently generates $110,000 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 $104,000, and accounts receivable will average $13,000. 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. DSO Existing: days DSO New: days
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
A CARDBOARD BOX FACTORY pays its suppliers 40 days after making the purchase and receiving the goods. The average collection period is 45 days, i.e. its customers settle their debt with the company in that time; and the average inventory age is based on the inventory turnover which is 10 times a year. The company spends about $1.23 million in operating cycle investments. With this data we need to calculate: The operating cycle.The cash conversion cycle.The cash turnover.The minimum cash balance.You plan to make modifications to your policies so that you can decrease your PPC by 10 days, and decrease your EPI by 2 times (before converting it to days). Negotiations with your supplier have been unsuccessful and the payment term has been reduced by 10 days. With these data you have to calculate: Re-calculate the Operating Cycle, the SCC, RC and SMC introducing the proposed changes.Calculate the opportunity cost that the changes will cause, if the company's interest rate is 8%.
Suppose that Dunn Industries has annual sales of $2.3 million, cost of goods sold of $1,650,000, average inventories of $1,116,000, and average accounts receivable of $750,000. Assume that all of Dunn’s sales are on credit.What will be the firm’s operating cycle? (Use 365 days a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.)

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