# Question

The Brenmar Sales Company had a gross profit margin (gross profits 4 sales) of 30 percent and sales of $9 million last year. Seventy-five percent of the firm’s sales are on credit, and the remainder is cash sales. Brenmar’s current assets equal $1.5 million, its current liabilities equal $300,000, and it has $100,000 in cash plus marketable securities.

a. If Brenmar’s accounts receivable equal $562,500, what is its average collection period?

b. If Brenmar reduces its average collection period to 20 days, what will be its new level of accounts receivable?

c. Brenmar’s inventory turnover ratio is 9 times. What is the level of Brenmar’s inventories?

a. If Brenmar’s accounts receivable equal $562,500, what is its average collection period?

b. If Brenmar reduces its average collection period to 20 days, what will be its new level of accounts receivable?

c. Brenmar’s inventory turnover ratio is 9 times. What is the level of Brenmar’s inventories?

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