Sampson Orange Juice Company normally takes 30 days to pay for its average daily credit purchases of $7,500. Its average daily sales are $9,000, and it collects its accounts in 34 days.
a. What is its net credit position?
b. If the firm extends its average payment period from 30 days to 45 days (and all else remains the same), what is the firm's new net credit position? Has it improved its cash flow?