Question
Hakuna Inc. sells on terms of 3/10, net 30 days. Gross sales for the year are P2,400,000 and the collections department estimates that 30% of
Hakuna Inc. sells on terms of 3/10, net 30 days. Gross sales for the year are P2,400,000 and the collections department estimates that 30% of the customers pay on the 10th day and take discounts; 40% pay on the 30th day; and the remaining 30% pay, on the average, 40 days after the purchase. Assuming 360 days per year, what is the average collection period. * A. 40 days B. 15 days C. 20 days D. 27 days
Determining the appropriate level of working capital for a firm requires * A. Evaluating the risks associated with various levels of fixed assets and the types of debt used to finance these assets. B. Changing the capital structure and dividend policy for the firm. C. Maintaining short-term debt at the lowest possible level because it is ordinarily more expensive than long term debt. D. Offsetting the profitability of current assets and current liabilities against the probability of technical insolvency.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started