Concept explainers
1)
Case summary:
Person R and his brother person J planned to start a business of wholesale building supply.
Term of sale is net 30 and the brothers are expected to 30% of the customers to pay on the 10th day followed by the sale and 50% on the 40th day, and 20% of the customers on 70th day.
Characters in the case:
- Person R
- Person J
To discuss: The expected days sales outstanding (DSO) of the firm.
b)
To discuss: The expected average daily sales (ADS).
c)
To discuss: The expected average accounts receivables.
d)
To determine: The receivables balance to be financed and the accounts receivable,
e)
To determine: The annual dollar cost of carrying the receivables
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Intermediate Financial Management (MindTap Course List)
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