McGriff Dog Food Company normally takes 30 days to pay for average daily credit purchases of $9,730. Its average daily sales are $10,010, and it collects accounts in 32 days. a. What is its net credit position? Net credit position b-1. If the firm extends its average payment period from 30 days to 37 days (and all else remains the same), what is the firm's new net credit position? (Negative amount should be indicated by a minus sign.) Net credit position b-2. Has the firm improved its cash flow? Yes No

McGriff Dog Food Company normally takes 30 days to pay for average daily credit purchases of $9,730. Its average daily sales are $10,010, and it collects accounts in 32 days. a. What is its net credit position? Net credit position b-1. If the firm extends its average payment period from 30 days to 37 days (and all else remains the same), what is the firm's new net credit position? (Negative amount should be indicated by a minus sign.) Net credit position b-2. Has the firm improved its cash flow? Yes No

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime rate plus 4%. The starting balance on October 1 was $9,100. On October 4 they made a payment of $1,400. On October 13 the business borrowed $2,100, and on October 19 they borrowed $4,800. If the current prime rate is 8%, what is the new balance (in $)? (Round your answer to the nearest cent.)
Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 4/10, net 65. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its non-free trade credit? (Assume a 365-day year.) a. 21.98% b. 27.65% c. 29.49% d. 31.12% e. 28.46%
Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime rate plus 4%. The starting balance on October 1 was $9,300. On October 4 they made a payment of $1,800. On October 13 the business borrowed $2,500, and on October 19 they borrowed $4,400. If the current prime rate is 6%, what is the new balance (in $)? (Round your answer to the nearest cent.) $ 11,145.48
Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime rate plus 4%. The starting balance on October 1 was $9,900. On October 4 they made a payment of $1,400. On October 13 the business borrowed $2,900, and on October 19 they borrowed $4,200. If the current prime rate is 6%, what is the new balance (in $)? (Round your answer to the nearest cent.)
Dome Metals has credit sales of $162,000 yearly with credit terms of net 30 days, which is also the average collection period. a. Assume the firm offers a 2 percent discount for payment in 15 days and every customer takes advantage of the discount. Also assume the firm uses the cash generated from its reduced receivables to reduce its bank loans which cost 8 percent. What will the net gain or loss be to the firm if this discount is offered? (Use a 360-day year.) Loss of: $_________
A large retailer obtains merchandise under the credit terms of 2/15, net 30, but routinely takes 50 days to pay its bills. (Because the retailer is an important customer, suppliers allow the firm to stretch its credit terms.) What is the retailer's effective cost of trade credit? Assume a 365-day year. Do not round intermediate calculations. Round your answer to two decimal places.
Ingraham Inc. currently has $500,000 in accounts receivable, and its days sales outstanding (DSO) is 44 days. It wants to reduce its DSO to 20 days by pressuring more of its customers to pay their bills on time. If this policy is adopted, the company's average sales will fall by 10%. What will be the level of accounts receivable following the change? Assume a 365-day year. Do not round intermediate calculations. Round your answer to the nearest cent
Which one of the following statements is correct if a firm has a receivables turnover of 10? It takes the firm an average of 36.5 days to sell its items. The firm has ten times more in accounts receivable than it does in cash. The firm collects its credit sales in an average of 36.5 days. It takes the firm 10 days to collect payment from its customers.
Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime rate plus 4%. The starting balance on October 1 was $9,300. On October 4 they made a payment of $1,800. On October 13 the business borrowed $2,500, and on October 19 they borrowed $4,400. If the current prime rate is 6%, what is the new balance (in $)? (Round your answer to the nearest cent.) $
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