1. Williams & Sons last year reported sales of $16 million, cost of goods sold (COGS) of $12 and an inventory turnover ratio of 2. The company is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 6 while maintaining the same level of sales and COGS, how much cash will be freed up? Do not round intermediate calculations. Round your answer to the nearest dollar.
2. Medwig Corporation has a DSO of 20 days. The company averages $8,000 in sales each day (all customers take credit). What is the company's average accounts receivable? Round your answer to the nearest dollar.
3. A large retailer obtains merchandise under the credit terms of 3/20, net 30, but routinely takes 65 days to pay its bills. (Because the retailer is an important customer, suppliers allow the firm to stretch its credit terms.) What is the retailer's effective cost of trade credit? Assume 365 days in year for your calculations. Do not round intermediate calculations. Round your answer to two decimal places.