McGriff Dog Food Company normally takes 20 days to pay for average daily credit purchases of...
McGriff Dog Food Company normally takes 20 days to pay for average daily credit purchases of $9,960. Its average daily sales are $10,510, and it collects accounts in 25 days. a. What is its net credit position? b-1. If the firm extends its average payment period from 20 days to 28 days (and all else remains the same), what is the firm's new net credit position? (Negative amount should be indicated by a minus sign.) b-2. Has the firm improved its cash flow? Yes No
Homework Answers
| a) | Net credit position | Accounts receivable - Accounts payable | $ 63,550 | =25*10510-20*9960 |
| b-1) | Net credit position | Accounts receivable - Accounts payable | -$16,130 | =25*10510-28*9960 |
| b-2) | Yes, Firm cash flow improved. | |||
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McGriff Dog Food Company normally takes 20 days to pay for
average daily credit purchases of...
McGriff Dog Food Company normally takes 24 days to pay for average daily credit purchases of...
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