Question: Guisachan Books Inc is a small book retailer Guisachan has

Guisachan Books Inc. is a small book retailer. Guisachan has approached your company, a large publishing house, requesting credit terms on purchases. Guisachan has never purchased from your company. If credit is approved, Guisachan would be given 60 days to pay outstanding amounts. You have been provided with the following information from Guisachan’s accounting records (Guisachan’s year-end is March 31):

a. Calculate Guisachan's accounts payable turnover ratio and average payment period for accounts payable for 2015, 2016, and 2017.
b. Assume that you are the publishing house credit manager. How would you interpret the information about Guisachan's accounts payable? How would this information influence your decision about offering credit to Guisachan? Explain. What addi tional information would you request before making a final decision? Explain.
c. What effect will the results you calculated in (a) have on Guisachan's cash from operations? Explain. Is this a good situation? Explain. How might Guisachan's suppliers respond?Explain.

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  • CreatedFebruary 26, 2015
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