General accounting McEwan Industries sells on terms of 3/10, net 35. Total sales for the year are$785,000; 40% of the customers pay on the 10th day and take discounts,while the other 60% pay, on average, 86 days after their purchases. Assume365 days in a year for your calculations.A) What is the days sales outstanding? Round your answer to two decimalplaces.B) What is the average amount of receivables? Round your answer to thenearest cent. Do not round intermediate calculations.C) What is the percentage cost of trade credit to customers who take thediscount? Round your answers to two decimal places.D) What is the percentage cost of trade credit to customers who do not takethe discount and pay in 86 days? Round your answers to two decimal places.Do not round intermediate calculations.

Step 1: Define Credit SalesCredit sales are sales made on credit. Credit sales are the main source…

Answered: McEwan Industries sells on terms of…

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

Section: Chapter Questions

Problem 2MC

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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.)
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.)
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.)
Your company has been offered credit terms on its purchases of 4/30, net 90days. What will be the nominal annual cost of trade credit if your companypays on the 35th day after receiving the invoice? (Assume a 365-day year.) Show your complete solution.
Note: The rate of interest on Epona's overdraft is 10 per cent per annum. Required: a. Calculate four ratios for each company showing profitability and five showing liquidity. (Use 365 days a year. Round your trade receivable days and credit period ratio answers to 1 decimal place, and all other answers to 2 decimal places.) find profit before interest and tax, return on capital employed (before interest and tax), capital turnover and credit period ratio.
Leyton Lumber Company has sales of $10 million per year, all on credit terms calling for payment within 30 days, and its accounts receivable are $2.25 million. Assume 365 days in year for your calculations. What is Leyton's DSO? Do not round intermediate calculations.Round your answer to two decimal places. days What would DSO be if all customers paid on time? Do not round intermediate calculations. Round your answer to two decimal places. days How much capital would be released if Leyton could take actions that led to on-time payments? Write out your answer completely. For Example, 13.2 million should be entered as 13,200,000. Do not round intermediate calculations. Round your answer to the nearest cent.$
The company has a 10% interest bearing, promissory note of 50,000, payable after 5 years. Sales during the year is 363,375 (20% earnings after taxes). Tax rate is 15%. What is the company's degree of financial leverage? (Round off to two decimal places between computations. Round off the final answer to two decimal places. Example of writing your answer 2.58 times)
Leyton Lumber Company has sales of $11 million per year, all on credit terms calling for payment within 30 days, and its accounts receivable are $1.43 million. Assume 365 days in year for your calculations. What is Leyton's DSO? Round your answer to two decimal places. days What would DSO be if all customers paid on time? Do not round intermediate calculations. Round your answer to two decimal places. days How much capital would be released if Leyton could take actions that led to on-time payments? Write out your answer completely. For Example, 13.2 million should be entered as 13,200,000. Do not round intermediate calculations. Round your answer to the nearest cent.$
Suppose you deposited $1,000 in a credit union account that pays 7% with dailycompounding and a 365-day year. What is the EFF%, and how much could youwithdraw after 7 months, assuming this is seven-twelfths of a year? [EFF% = (1 +0.07/365)365 - 1 = 0.07250098 = 7.250098%. Thus, your account would growfrom $1,000 to $1,000 (1.07250098)0.583333 = $1,041.67, and you could withdraw that amount.]
Please see image to solve question.
What's the rate of return you would earn if you paid $2,880 for a perpetuity that pays $65 per year? X-1 Corp's total assets at the end of last year were $425,000 and its EBIT was $52,500. What was its basic earning power (BEP) ratio?
If $1 million face amount of commercial paper(270 day paper) is sold for $982,500, what is the simple rate of interest paid? What is the compound annual rate?

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