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Spring Company collected the following data pertaining to its activities with its 3 largest customers. Spring Company mails monthly statements on or before the first
Spring Company collected the following data pertaining to its activities with its largest
customers.
Spring Company mails monthly statements on or before the first day of each month.
Hs INC pays all of its account payables accounts within the payment discount
periods.
Adventix does not take the early payment discounts. In fact, the company pays half
of its accounts on the date that these accounts are due and pays the remainder at
the end of the following month.
Likewise Baldwin does not take advantage of discounts for early payments. However,
it pays its accounts on the specified due date.
Cost of goods sold is fifty five percent of gross sales price.
Sarah Lilac, the controller of Spring Company, has estimated that the cost of working capital
is approximately percent per month.
The following data relates to the other smaller customers of Spring Company:
Lilac also gathered the following cost data:
Required:
Prepare and interpret a customer profitability analysis for Spring Company.
How does it help Spring Company become more competitive and profitable?
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