The cost of the proposed system is $1.6 million, including initial software licence fees, external consulting costs for design and implementation, and labour costs for implementation. The first of several lump-sum payments to the software vendor is in November this year. The first payment of $800,000 is the largest. The remaining three payments are for $300,000 on January 1, $300,000 on April 1, and $200,000 on May 1, all next year. The system is being financed with a five-year loan that is to be repaid at $30,000 a month, including principal and interest calculated at 7% per annum, with any remaining balance to be paid at the end of the five-year term. The software would be ready for use on June 30 next year, at which time HT would stop using the old systems. It is anticipated that the system will have zero salvage value at the end of the five-year term. The proposed system would allow HT to integrate its current billing, general ledger, accounts receivable tracking, and customer management systems. This would allow HT to permanently cut five jobs in the finance, customer relationship, and operations areas. Shareholder value will be created by taking advantage of this opportunity. What is inventory turnover and how is it calculated? What is accounts receivable turnover and how is it calculated?

Answer rating: 100% (QA)

Inventory turnover and accounts receivable turnover are two important financial ratios used to assess the efficiency and effectiveness of a companys o... View the full answer