List one practical way a company could reduce average collection period by 1 day
List one practical way a company could reduce average collection period by 1 day
Homework Answers
One way that a company could reduce average collection period is to incentivize customers to pay earlier by offering cash discounts for earlier payments. For example, let us say that the standard credit period extended to customers is 30 days. The company could offer a cash discount of 1% of the invoice amount if the customer pays within 25 days. Although not all customers will take up the offer, it can be expected that some of them would take the discount. This can reduce the overall average collection period by around 1 day.
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List one practical way a company could reduce average collection
period by 1 day
A firm ended the year with an average collection period of 20 day. The firm’s credit...
A
firm ended the year with an average collection period of 20 day.
The firm’s credit sales were $50 million. What is the firm’s
year-end balance in accounts receivable?
Calculate the accounts receivable turnover and average collection period. Assume that average net accounts receivable were...
Calculate the accounts receivable turnover
and average collection period. Assume that average net accounts
receivable were $325,000. (Use 365 days for
calculation. Round average collection period to 1 decimal place,
e.g. 15.1.)
Question 14 0.67/1 View Policies Show Attempt History Current Attempt in Progress During its first year of operations, Sandhill Company had credit sales of $3,900,000, of which $410,000 remained uncollected at year-end. The credit manager estimates that $23,400 of these receivables will become uncollectible. Your answer is correct....
One way a firm could reduce the risk of problems with supplier dependability is to A...
One way a firm could reduce the risk of problems with supplier dependability is to A require suppliers to be ISO 9000 certified. B use an ERP system for purchases. C purchase inventory from only U.S.-based suppliers. D automate the purchasing function.
BB currently has average collection period of 37 days, annual sales of 330,000 units at a...
BB currently has average collection period of 37 days, annual sales of 330,000 units at a selling price of $30 a piece, and contribution margin $18. It is considering a tightening of credit policy that would reduce average collection period to 21 days and reduce sales to 328,000 units. There are no bad debts, and BB has required return of 7%. What is the net profit from tightening the credit policy?
Forrester Fashions has annual credit sales of 250,000 units with an average collection period of 70 days. The company h...
Forrester Fashions has annual credit sales of 250,000 units with an average collection period of 70 days. The company has a per-unit variable cost of $20 and a per-unit sale price of $30. Bad debts currently are 5% of sales. The firm estimates that a proposed relaxation of credit standards would not affect its 70-day average collection period but would increase bad debts to 7.5% of sales, which would increase to 300,000 units per year. Forrester requires a 12% return...
A company is considering a lockbox system that will reduce the collection time by 2 days...
A company is considering a lockbox system that will reduce the collection time by 2 days on average. The company can earn an APR of 2.98% compounded daily on any cash balance. The average number of daily payments submitted to the lockbox is 2,131 with an average cheque size of $53. If the processing fee per cheque is $0.01, what is the NPV of adopting this lockbox? (Assume 365 days in one year.) -$35,126 -$36,004 -$36,882 -$37,760 -$38,638
Forrester Fashions has annual credit sales of 250,000 units with an average collection period of 70...
Forrester Fashions has annual credit sales of 250,000 units with an average collection period of 70 days. The company has a per-unit variable cost of $20 and a per-unit sale price of $30.00. Bad debts currently are 5% of sales. The firm estimates that a proposed relaxation of credit standards would not affect its 70-day average collection period but would increase bad debts to 7.50% of sales. which would increase to 300,000 units per year. Forrester requires a 12% return...
Darla’s Cosmetics has annual credit sales of $1,314,000 and an average collection period of 45 days...
Darla’s Cosmetics has annual credit sales of $1,314,000 and an average collection period of 45 days in 2008. What is the company’s average accounts receivable balance? (Use a 360-day year.)
Mervyn's Fine Fashions has an average collection period of 30 days. The accounts receivable balance is...
Mervyn's Fine Fashions has an average collection period of 30 days. The accounts receivable balance is $78,000. What is the value of its annual credit sales? (Use a 360-day year.)
If the company's accounts receivable turnover is increasing, the average collection period Multiple Choice O is...
If the company's accounts receivable turnover is increasing, the average collection period Multiple Choice O is going up slightly. o is going down. O could be moving in either direction, is going up by a significant amount
A
firm ended the year with an average collection period of 20 day.
The firm’s credit sales were $50 million. What is the firm’s
year-end balance in accounts receivable?
Calculate the accounts receivable turnover
and average collection period. Assume that average net accounts
receivable were $325,000. (Use 365 days for
calculation. Round average collection period to 1 decimal place,
e.g. 15.1.)
Question 14 0.67/1 View Policies Show Attempt History Current Attempt in Progress During its first year of operations, Sandhill Company had credit sales of $3,900,000, of which $410,000 remained uncollected at year-end. The credit manager estimates that $23,400 of these receivables will become uncollectible. Your answer is correct....
A company is considering a lockbox system that will reduce the collection time by 2 days on average. The company can earn an APR of 2.98% compounded daily on any cash balance. The average number of daily payments submitted to the lockbox is 2,131 with an average cheque size of $53. If the processing fee per cheque is $0.01, what is the NPV of adopting this lockbox? (Assume 365 days in one year.) -$35,126 -$36,004 -$36,882 -$37,760 -$38,638
Forrester Fashions has annual credit sales of 250,000 units with an average collection period of 70 days. The company has a per-unit variable cost of $20 and a per-unit sale price of $30.00. Bad debts currently are 5% of sales. The firm estimates that a proposed relaxation of credit standards would not affect its 70-day average collection period but would increase bad debts to 7.50% of sales. which would increase to 300,000 units per year. Forrester requires a 12% return...
Mervyn's Fine Fashions has an average collection period of 30 days. The accounts receivable balance is $78,000. What is the value of its annual credit sales? (Use a 360-day year.)
If the company's accounts receivable turnover is increasing, the average collection period Multiple Choice O is going up slightly. o is going down. O could be moving in either direction, is going up by a significant amount
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