A firm offers terms of 2/15, net 30. Currently, two-thirds of all customers take advantage of the trade discount; the remainder pay bills at the due date.
a. What will be the firm's typical value for its trade receivables period? (See Section 20.2 for a review of the trade receivables period.)
b. What is the average investment in trade receivables if annual sales are $20 million?
c. What would likely happen to the firm's trade receivables period if it changed its terms to 3/15, net 30?