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.
Answer to relevant QuestionsManitoba Services is considering undertaking a new order that would cause its average days of revenues in payables (ADRP) to decrease from 58 days to 45 days, while its average collection period (ACP) will remain at 90 days ...Calculate the cash conversion cycle (CCC) for the company examined in questions 2 to 4.ABC Inc. currently grants no credit, but it is considering offering new credit terms of net 30. As a result, the price of its product will increase by $2 per unit. The original price per unit is $50. Expected sales will ...a. Calculate the effective annual cost of forgoing the discount from credit terms of 2/15 net 40. The selling price is $600.b. Another supplier offers $620 on credit terms of net 60. If you could finance the purchase by ...State four main motives firms have to hold cash.
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