Question: A company receives an average of 100 000 in cheques per
A company receives an average of $100,000 in cheques per day from its customers. It takes the company an average of five days to receive and deposit these cheques. The company is considering a lockbox arrangement that would reduce its collection float time by three days, and cost it $50 per month. If its opportunity cost of funds tied up in float is 2 percent, should it adopt the new system?
Answer to relevant QuestionsWhat are secondary market transactions? How do secondary markets facilitate the primary markets?What are three major sources of float? What are some common methods that address float?ABC Inc. grants credit terms of net 25. It is considering a new policy that involves more stringent credit terms: net 20. As a result, the price of its product will stay the same at $45. The expected sales will decrease by ...Suppose Sio Inc. has 60 days of accounts receivable (AR) of $900,000 on its books. A factor offers a 60-day AR loan equal to 90 percent of AR. The quoted interest rate is 8 percent, and there is a commission fee of 0.5 ...What is the purpose of credit analysis and how is it accomplished?
Post your question