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Weir Incorporated has sales of $230,000 and accounts receivable of $20,500. You can easily show that its DSO is well over the industry average of
Weir Incorporated has sales of $230,000 and accounts receivable of $20,500. You can easily show that its DSO is well over the industry average of 27 days. Suppose that it speeds up collection, matches the industry average, and manages to earn 7% interest on the cash not tied up in receivables. What would be the savings per year? Assume that sales are not affected by the tighter credit.
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