Great Northern Manufacturing presently has net working capital of $100,000 and sales of $150,000. It is considering
Question:
Great Northern Manufacturing presently has net working capital of $100,000 and sales of $150,000. It is considering entering into a new project that would increase next year’s sales by $7,500. The project would result in a decrease in the average collection period of receivables (or days receivables) by two days (from 32 days to 30 days), but would have no impact on the other working capital items. Estimate the accounts receivable before and after the firm undertakes the project. Estimate the change in net working capital that will result for this firm if it undertakes the project.
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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