Why do we include only the variable cost of sales when estimating the average investment in accounts receivable? Why do we apply an opportunity cost to this investment to estimate its cost?
Answer to relevant QuestionsWhat are the key elements of a firms credit terms? What is a key determinant of the credit terms offered by a firm? What general cost trade-offs are associated with the firms level of short- term financing? How do these costs behave when a firm substitutes short-term financing for long- term financing? How would you quantitatively model ...What impact would aggressive action aimed at minimizing a firm’s cash conversion cycle (CCC) have on the following financial ratios: inventory turnover, average collection period, and average payment period? What are the ...What is the key base rates used in variable rate short- term borrowing, and how do they factor into the all-in-rate? What other charges might be applicable to short-term borrowing? How do they impact the effective borrowing ...Briefly describe each of the following funds transfer mechanisms: • Depository transfer check (DTC) • Automated clearinghouse (ACH) debit transfer • Wire transfer Why are wire transfers typically used only for ...
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