Question
1. Martin Industries places an order for 500 units of inventory from a supplier. Colin, the purchasing manager pays $250 a unit. The supplier offers
1. Martin Industries places an order for 500 units of inventory from a supplier. Colin, the purchasing manager pays $250 a unit. The supplier offers terms of 2/10 , net 30
a. How long does Colin have to pay before the account is overdue ? If he takes the discount, how much will he remit?
b. What is the discount , how quickly does Colin have to pay it and how much should he remit if he takes the discount?
C. If he doesn't take the discount, what is the implicit interest?
2. The Fitzgerald Corporation has annual sales of $ 54 million . The average collection period is 45 days. What is the average investment in accounts receivable , assuming a 365 day year?
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