Vanity Press, Inc., has annual credit sales of $1,600,000 and a gross profit margin of 35 percent.
Question:
a. If the firm wishes to maintain an average collection period of 50 days, what level of accounts receivable should it carry?
b. The inventory turnover for this industry averages six times. If all of Vanity’s sales are on credit, what average level of inventory should the firm maintain to achieve the same inventory turnover figure as the industry?
Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
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a 50 days Accounts Receivable1600000365 days 50 day...View the full answer
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Rajesh Singh
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Related Book For 
Contemporary Financial Management
ISBN: 9780324289114
10th Edition
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow
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