General accounting solve question Western Gas & Electric Co.'s CFO has decided to takea closer look at the company's credit policy. WesternGas & Electric Co. has annual sales of $379.3 million,and it currently has an accounts receivable balanceof $46.3 million. The average Dso for Western Gas &Electric Co.'s industry is 51.2 days. Assuming that itssales stayed the same, what would be Western Gas& Electric Co.'s receivables balance if it maintainedthe industry average?

Step 1:- Define Days Sales OutstandingDays Sales Outstanding (DSO) estimates the average days…

Answered: Western Gas & Electric Co.'s CFO has…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter16: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 11P

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If a firm has sales of $25,689,00 a year, and the average collection period for the industry is 45 days, what should this firm's accounts receivable be in the firm is comparable to the industry?
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Rose Company currently uses maximum trade credit by not taking discounts on its purchases. The standard industry credit terms offered by all its suppliers are 2/10 net 30 days, and the firm pays on time. The new CFO is considering borrowing from its bank, using short-term notes payable, and then taking discounts. The firm wants to determine the effect of this policy change on its net income. Its net purchases are P11,760 per day, using a 365-day year. The interest rate on the notes payable is 10%, and the tax rate is 40%. If the firm implements the plan, what is the expected change in net income? P32,964 P40,370 P36,526 P34,699 P38,448
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