Question

Barans Company currently has an average collection period of 55 days and annual sales of $1 billion. Assume a 365-day year.
a. What is the firm’s average accounts receivable balance?
b. If the variable cost of each product is 65% of sales, what is the average investment in accounts receivable?
c. If the equal-risk opportunity cost of the investment in accounts receivable is 12%, what is the total annual cost of the resources invested in accounts receivable?


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  • CreatedMarch 26, 2015
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