(Note: Use 365 days as the length of a year in all calculations.) The average DSO for Wok Bar Co.'s industry is 51.7 days. Assuming that its sales stayed the same, what would be Wok Bar Co.'s receivables balance if it maintained the industry average DS07 Based on this information, Wok Bar Co.'s DSO is Wok Bar Co.'s CFO thinks that the company has not done a very good job of enforcing its credit policy. The CFO believes that if the company were to better enforce its credit policy, it would reduce its DSO to 30 days; however, this will cause Wok Bar Co. to lose 6% of its sales revenue. What would Wok Bar Co.'s expected accounts receivables balance be if it decides to tighten its credit policy? O $32,149,152 O $26,025,504 O $33,680,064 O $30,618,240
(Note: Use 365 days as the length of a year in all calculations.) The average DSO for Wok Bar Co.'s industry is 51.7 days. Assuming that its sales stayed the same, what would be Wok Bar Co.'s receivables balance if it maintained the industry average DS07 Based on this information, Wok Bar Co.'s DSO is Wok Bar Co.'s CFO thinks that the company has not done a very good job of enforcing its credit policy. The CFO believes that if the company were to better enforce its credit policy, it would reduce its DSO to 30 days; however, this will cause Wok Bar Co. to lose 6% of its sales revenue. What would Wok Bar Co.'s expected accounts receivables balance be if it decides to tighten its credit policy? O $32,149,152 O $26,025,504 O $33,680,064 O $30,618,240
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
Related questions
Question
first drop down:
credit terms
credit standards
collection policy
Second drop down:
35.54
37.63
41.81
29.27
Third drop down:
53,326,759
50,520,087
61,746,773
56,133,430
Transcribed Image Text:Effective credit management involves establishing credit standards for extending credit to customers, determining the company's credit terms, and
setting up procedures for invoicing and collecting past-due accounts.
The following statement refers to a credit management policy. Select the best term to complete the sentence.
The minimum financial strength a customer must have to be granted credit is indicated by the company's
Consider the case of Wok Bar Co.:
Wok Bar Co.'s CFO has decided to take a closer look at the company's credit policy. Wok Bar Co. has annual sales of $396.3 million, and
it currently has an accounts receivable balance of $45.4 million. The first step in analyzing the firm's credit policy is to determine its
days sales outstanding (DSO).
(Note: Use 365 days as the length of a year in all calculations.)
The average DSO for Wok Bar Co.'s industry is 51.7 days. Assuming that its sales stayed the same, what would be Wok Bar Co.'s receivables balance if
it maintained the industry average DSO?
Based on this information, Wok Bar Co.'s DSO is
Wok Bar Co.'s CFO thinks that the company has not done a very good job of enforcing its credit policy. The CFO believes that if the company were to
better enforce its credit policy, it would reduce its DSO to 30 days; however, this will cause Wok Bar Co. to lose 6% of its sales revenue. What would
Wok Bar Co.'s expected accounts receivables balance be if it decides to tighten its credit policy?
$32,149,152
O $26,025,504
O $33,680,064
O $30,618,240
4
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