n 1 The firm's average collection period ACP is 39 days. Purchases are 75% of sales and are made a month before the sales month. About 40% of a month's purchases is paid in the same month whereas the remainder is paid in the next month. Assume there are 30 days in a month Feb, 2022 Mar, 2022 Apr, 2022 Sales (RM) 52,000 55,000 54,000 (a)What is the total amount of sales collection in April 2022? (b) What is the total amount of purchase disbursement in March 2022?
Question 1
The firm's average collection period ACP is 39 days. Purchases are 75% of sales and are made a month before the sales month. About 40% of a month's purchases is paid in the same month whereas the remainder is paid in the next month. Assume there are 30 days in a month
Feb, 2022 Mar, 2022 Apr, 2022
Sales (RM) 52,000 55,000 54,000
(a)What is the total amount of sales collection in April 2022?
(b) What is the total amount of purchase disbursement in March 2022?
Question 2
A firm's expected sales in the coming year is RM3.6 million, and the firm's average receivables for the year is RM400,000. The firm is considering factoring the receivables. A factor offers a discount rate of 1.75%% for the firm's receivables. [Assume there are 360 days in a year]
(a) How much can the firm obtain from factoring its receivables, and for how long?
(b) What is the cost per year to the firm if it factors its receivables continually?
(c) if a bank offers a loan for the interest rate of 9% per year, should the firm take the bank loan or factor its receivables? Explain.
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