Question: The McCollough Company has a variable operating cost ratio of
The McCollough Company has a variable operating cost ratio of 70 percent, its cost of capital is 10 percent, and current sales are $10,000. All of its sales are on credit, and it currently sells on terms of net 30. Its accounts receivable balance is $1,500. McCollough is considering a new credit policy with terms of net 45. Under the new policy, sales will increase to $12,000, and accounts receivable will rise to $2,500. Compute the DSO under the existing policy and the proposed policy.
Answer to relevant Questionsa. If a firm buys under terms of 3/15, net 45, but actually pays on the 20th day and still takes the discount, what is the APR of its nonfree trade credit?b. Does the firm receive more or less credit than it would if it paid ...Calculate the APR and the rEAR of nonfree trade credit under each of following terms. Assume payment is made either on the last due date or on the discount date.a. 1/15, net 20b. 2/10, net 60c. 3/10, net 45d. 2/10, net 45e. ...Durst Corporation began operations five years ago as a small firm serving customers in the Denver area. However, its reputation and market area grew quickly so that today Durst has customers throughout the entire United ...The UFSU Corporation intends to borrow $450,000 to support its short-term financing requirements during the next year. The company is evaluating its financing options at the bank where it maintains its checking account. ...Explain the difference between a dividend yield and a capital gain (loss). Which is preferable from an investor’s standpoint?
Post your question