1. An analysis of the monthly pattern of credit sales receipts shows that on average, customers are paying more slowly than expected. What types of corrective action might management take, as a result of this analysis?
2. In order to reduce holding costs, RTY limited deliberately maintains low levels of raw materials inventory, and has arrangements in place for the supplier to deliver these materials on an as-needed basis two days before their use. Discuss the additional costs to RTY of this arrangement.
3. A supplier requires all accounts to be settled within 40 days, but is offering your business a discount if you settle your accounts within 7 days of purchase. , you calculate an effective annual interest rate of 14.3%. Explain how you should decide whether to accept the discount and pay within 7 days, or to delay payment as long as possible.