Mace auto parts company solve this question general Accounting Mace Auto Parts Company sells to retail auto supply storeson credit terms of "net 60." Annual credit sales are $300million (spread evenly throughout the year) and itsaccounts average 28 days overdue. The firm's variable costratio is 0.75 (i.e. variable costs are 75 percent of sales).When converting from annual to daily data or vice versa,assume there are 365 days per year. Determine Mace'saverage collection period.

Step 1: Define Average Collection PeriodThe average collection period refers to the period in which…

Answered: Mace Auto Parts Company 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?
Answer? ? General Accounting
Suncoast Boats Inc. estimates that because of seasonal nature of its business, it will borrow $5,000,000 for 70 days. Suncoast will borrow @ 9% annum using a discount loan. There will be $53,000 in up - front fees. a. Find loan amount b. Find interest. c. Find other cost/fees. d. Find compensating balance. e. Find m and period rate. f. Find Annual Percentage Rate, APR g. Find effective annual rate, EAR.
Han Corp's sales last year were $300,000, and its year-end receivables were $49,000. The firm sells on terms that call for customers to pay 30 days after the purchase, but some delay payment beyond Day 30. On average, how many days late do customers pay? Base your answer on this equation: DSO - Allowed credit period = Average days late, and use a 365-day year when calculating the DSO. Assume all sales to be on credit. Do not round your intermediate calculations.
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
Petron Pet Supplies sells on terms of 3/10, net 60. What is the effective annual cost of trade credit under these terms? Use a 365-day year.help
Petron Pet Supplies sells on terms of 3/10, net 60. What is the effective annual cost of trade credit under these terms? Use a 365-day year.
Grunewald Industries sells on terms of 1/10, net 40. Gross sales last year were $4,453,000 and accounts receivable averaged $427,000. 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.
Petron Pet Supplies sells on terms of 3/10, net 60. What is the effective annual cost of trade credit under these terms? Use a 365-day year. ANSWER
Taylor Company provides the following information: Annual credit sales : $ 24,000,000Collection period : 3 monthsTerms : net/30Rate of return : 18% The company is considering changing the credit discount policy to 4/10, net 30. The company anticipates that thirty percent of consumers will take the discount. The receivable collection period is expected to be reduced to 2 months. Should the discount policy be implemented? Explain with calculations.
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Hail and Sons operates for 240 days in a year. It has been offered credit terms of 4/30 net 90 days. What will be the nominal annual percentage cost if it is non-free trade credit?

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