Question
A firm offers terms of 4/40, net 70. Currently, two-thirds of all customers take advantage of the trade discount; the remainder pay bills at the
A firm offers terms of 4/40, net 70. 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 firms typical value for its accounts receivable period? (Do not round intermediate calculations.) |
Accounts receivable period | days |
b. | What is the average investment in accounts receivable if annual sales are $20 million? (Use 365 days in a year. Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.) |
Investment in accounts receivable | $ million |
c. | What would likely happen to the firms accounts receivable period if it changed its terms to 5/40, net 70? | ||||
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