The Brenmar Sales Company had a gross profit margin (gross profits/sales) of 25 percent and sales of $9.5 million last year. 74 percent of the firm's sales are on credit, and the remainder is cash sales. Brenmar's current assets equal $1.4 million, its current liabilities equal $295,500 and it has $100.500 in cash plus marketable securities. a. If Brenmars accounts receivable equal $562,800 what is its average collection period? b. If Brenmars reduces its average collection period to 20 days, what will be its new level of accounts receivable?

The Brenmar Sales Company had a gross profit margin (gross profits/sales) of 25 percent and sales of $9.5 million last year. 74 percent of the firm's sales are on credit, and the remainder is cash sales. Brenmar's current assets equal $1.4 million, its current liabilities equal $295,500 and it has $100.500 in cash plus marketable securities. a. If Brenmars accounts receivable equal $562,800 what is its average collection period? b. If Brenmars reduces its average collection period to 20 days, what will be its new level of accounts receivable?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter7: Analysis Of Financial Statements

Section: Chapter Questions

Problem 2P: Vigo Vacations has $200 million in total assets, $5 million in notes payable, and $25 million in...

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