Hi again,

Taking you up on your offer for help again. For some reason I'm ok at calculating numbers but I am not able to interpret it. If you don't mind helping me with the below that would be greatly appreciated, if you are able to. I've attached Problem 16.5 (already solved) as well as Home Infusion's calculations for ACP and Receivables balance.

"Imagine that you are the CFO for Milwaukee Surgical Supplies, Inc. from problem 16.5. After performing the calculations requested by the problem, you have been asked to write a memo identifying whether the results indicate that receivables management are a strength by comparing these results to that of a competitor. (Use Home Infusion's calculations for ACP and Receivables balance on page 584 of the text as the competitor.) In addition, please offer suggestions as to how Milwaukee Surgical could improve its ACP and Receivables balance in the future through the use of additional discounts or other strategies that you believe would be effective.

Your memo should be no more than 250 words in length.

All sources, including course materials, must be cited in text in APA style.Remember that course materials need not be included in your references page, but all other references must be."

\fHome Infusion \"The total amount of accounts receivable outstanding at any given time is determined by two factors: the volume of credit sales and the average length of time between sales and collections. For example, suppose Home Infusion provides an average of 10 home health visits a day at an average net charge of $100 per visit, for $1,000 in average daily billings (ADB). Assuming 250 workdays a year, the company's annual billings total $1,000 250 = $250,000. Furthermore, assume that all services are paid by two third-party payers: one pays for half of the billings 15 days after the service is provided, and the second pays for the other half of billings in 25 days. Home Infusion's average collection period (ACP), also called days in patient accounts receivable, is 20 days. ACP = (0.5 15 days) + (0.5 25 days) = 20 days. Assuming a constant uniform rate of services provided, and hence billings, the accounts receivable balance will at any point in time be equal to ABD ACP. Home Infusion's receivable balance would be $20,000: Receivables balance = ADB ACP = $1,000 20 = $20,000. What is the cost implication of carrying $20,000 in receivables? The $20,000 on the left side of the balance sheet must be financed by a like amount on the right side.4 Home Infusion uses a bank loan, which has an interest rate of 8 percent, to finance its receivables. Thus, over a year, the firm must pay the bank 0.08 $20,000 = $1,600 in interest to carry its receivables balance. The cost associated with carrying other current assets can be thought of in a similar way.\" 16.5 A. Customer Days 30% 40% 30% ACP Avg. coll. Per. 10 30 40 3 12 12 27 B. Current Receivables = 90000 C. New Receivable 80000 D. - Both at 8% Old Carrying Receivables = New Carrying Receivables = Amount Saved = 7200 6400 800 % of old receivables balance % of New receivables balance 7.5% 6.7% home fusion % of receivables balance 8.0% Milwaukee Surgical Supplies, Inc. The receivable management of Milwaukee Surgical Supplies , Inc. is a competitive strength as compared to the competitor Home infusion.. This is because ,even though the annual gross sales of $ 1,200,000 is more than the annual sales of Home infusion of $250,000 the management of Milwaukee Surgical Supplies manage to have a receivable balance of 7.5% before they change the credit terms and 6.7% after the change as compared to the competitor with less sales but has a receivable balance of 8%. Even though Home Infusion has a shorther collection period of 25 days than Milwaukee,they still have a higher receivables balance. Suggestion The receivable management of Milwaukee Surgical Supplies can increase the discount rate on the credit sales paid before the 10th day to attract more customers to pay within the credit period, which will in turn reduce the annual receivables carrying expenses