Problem 9-06

Assume Lasher's Kitchen has pretax earnings of $75,000 after depreciation expense of $15,000. If the firm's tax rate is 20 percent, what is its cash flow from operations? Round your answer to the nearest dollar.

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You prefer to extend credit on the assumption that you will be paid in full within 28 days of the sales. Firm X has average inventory of $600,000 with all cash sales (no credit sales) of $4,900,000. If you extend credit to this firm, can you expect to be paid on time? Assume 365 days in a year. Round your answer to the nearest whole number.

The inventory turnover is days, therefore, you -Select-cancannotItem 2 expect to be paid in 28 days.