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.

**identifying whether the results indicate that receivables management is a strength of Milwaukee by comparing these results to that of a competitor...Is Milwaukee stronger than Home Infusions?

 

 

 

Problem 16.5 a - d A- = (10 days * 30%) + (30 days * 40%) + (40 days * 30%) = 27 days %3D = Average Collection Period * Annual Sales = 27 days * ($1,200,000/360) =$90,000 B - C- Avg collection period = (10 days * 30%) + (30 days * 70%) Avg collection period = 24 days = 24 days * ($1,200,000/360) = $80,000 (New receivables balance) %3D D- Initial Carrying Expenses $ New Carrying Expenses Annual Receivables $ 7,200 =90000*8%' 6,400 =80000*8%' 800 =C2-C3'