Question

Starset, Inc., has an average collection period of 50 days. Its average daily investment in receivables is $44,300. Assume 365 days per year. a. What is the receivables turnover? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) b. What are annual credit sales? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

The Snedecker Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 1.6 percent per period.

  

	Current Policy			New Policy
Price per unit	$	62		$	64
Cost per unit	$	34		$	34
Unit sales per month		2,600			2,720

  

Calculate the NPV of the decision to change credit policies. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

1)

Receivables turnover 365/Average collection period 7.3000 =365/50 Annual credit sales Receivables turnover < Average daily receivables $ 323,390.00 -7.3*44300

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