Question

3. Accounts receivable 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 conditions of the credit sale, including cash discounts and due dates, are indicated by the company's Consider the case of Osato Chemicals Inc.: Osato Chemicals Inc.'s CFO has decided to take a closer look at the company's credit policy. Osato Chemicals Inc. has annual sales of $379.3 million, and it currently has an accounts receivable balance of $47.6 million. The first step in analyzing the firm's credit policy is to determine its days sales outstanding (DSO). Based on this information, Osato Chemicals Inc.'s DSO is V . (Note: Use 365 days as the length of a year in all calculations.) The average DSO for Osato Chemicals Inc.'s industry is 51.2 days. Assuming that its sales stayed the same, what would be Osato Chemicals Inc.'s receivables balance if it maintained the industry average DSO?

Answer 1

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ACCOUNTS latest - Microsoft Excel (Product Activation Failed) View Add-Ins - 2x Σ AutoSum : A Dr General File Home Insert Page Layout Formulas Data Review % Cut Calibri -11AA = = = Ea Copy Paste B I Format Painter U B- E A E E Clipboard Font Wrap Text FMerce Merge & Center - Center s 4.0 .00 . Insert Delete Format $ -% % Number Conditional Format Formatting as Table Styles Cell Styles Fill 2 Clear Sort & Filter Editing Find & Select Alignment Cells RO35 RG RH RI RJ RK RL RM RN RO RP RQ RR RS RT answer collection policy 32 33 34 35 36 37 38 39 DSO = ACP = AVERAGE COLLECTION PERIOD ACP = 365 DAYS X AVERAGE RECEIVABLES/ SALES answer DSO = 365 X 47.6/379.3 = 45.81 40 DSO = 365 DAYS X AVERAGE RECEIVABLES/ SALES 51.2 = 365 X AVERAGE RECEIVABLES/ 379.3 AVERAGE RECEIVABLES = 51.2 X 379.3/365 = answer 53.21 milion 53205918 in dollars 41 42 43 44 45 352.749 REVISED SALES = REVISED DSO = 379.3*(1-0.07) = 30 DAYS 47 DSO = 365 DAYS X AVERAGE RECEIVABLES/ SALES 30 = 365 X AVERAGE RECEIVABLES/ 352.749 AVERAGE RECEIVABLES = 30 X 352.749/365 = 28.9930800 million answer 28993080 in dollars 49 50 51 H Rea FIFO CASH BUDGET ferences: 569 budget 45 days cycle ROE, BV MV ratio VARIANCE BEP, OL FL ratios DETROIT float B-S profit loss SALES BUDGET dupont DIFF ANALYSIS BO! ovel 120% 1 ...B 199 * ENG 27-11-2019