Question
Delta Steel Company has been producing steel beams for 25 years and is growing at the rate of 5 percent per year. The CEO and
Delta Steel Company has been producing steel beams for 25 years and is growing at the rate of 5 percent per year. The CEO and CFO of Delta is considering changing their credit terms from 30 days same as cash to 60 days same as cash. This change would be effective May 1, 2019. You have just started preparing the 2019-2020 cash budget, which starts on May 1, 2019.
How would these new credit terms affect the new cash budget?
1. | None of the above | |
2. | Most likely it would have little, if any, affect | |
3. | Your accounts receivable collections would speed up | |
4. | You can expect more delinquent payments of accounts receivable | |
5. | You would need additional cash to cover the delayed accounts receivable payments due to the new terms |
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