Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

( Efficiency analysis ) ALei Industries has credit sales of $ 1 5 5 million a year. ALei's management reviewed its credit policy and decided

(Efficiency analysis) ALei Industries has credit sales of $155 million a year. ALei's management reviewed its credit policy and decided that it wants to maintain an average collection period of 45 days.
a. What is the maximum level of accounts receivable that ALei can carry and have a 45-day average collection period?
b. If ALei's current accounts receivable collection period is 50 days, how much would it have to reduce its level of accounts receivable in order to achieve its goal of 45 days?
a. What is the maximum level of accounts receivable that ALei can carry and have a 45-day average collection period?
The maximum level of accounts receivable will be $ million. (Round to one decimal place.)
b. If ALei's current accounts receivable collection period is 50 days, how much would it have to reduce its level of accounts receivable in order to achieve its goal of 45 days?
ALei needs to reduce its accounts receivable by million. (Round to one decimal place.)
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Taxation For Business And Investment Planning 2018

Authors: Sally Jones, Shelley C. Rhoades Catanach, Sandra R Callaghan

21st Edition

978-1259713729

Students also viewed these Accounting questions