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You believe that the value of both the inventory and accounts receivable are too high. The average balances and average age are as follows: Having
You believe that the value of both the inventory and accounts receivable are too high. The average balances and average age are as follows:
Having examined both the organizations inventory management systems and collection processes, you have determined new targets for average age of both assets. If you achieve these targets, how much additional cash will be provided for the organization?
\begin{tabular}{|l|c|c|c|} \hline \multicolumn{1}{|c|}{ Account } & Average Balance & Average Age (Days) & Targeted Age (Days) \\ \hline Accounts Receivable & $12,850,000 & 175 & 120 \\ \hline Inventory & $6,034,000 & 90 & 15 \\ \hline \end{tabular}Step by Step Solution
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