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16.5 in Healthcare Finance: An Introduction to Accounting and Financial Management on on page 555.




Question;16.5 Milwaukee Surgical Supplies, Inc., sells on terms of 3/10, net 30. Grosssales for the year are $1,200,000 and the collections department estimatesthat 30 percent of the customers pay on the tenth day and take discounts, 40percent pay on the thirtieth day, and the remaining 30 percent pay, onaverage, 40 days after the purchase. (Assume 360 days per year.)A.What is the firm?s average collection periodb. What is the firm?s current receivables balancec. What would be the firm?s new receivables balance if Milwaukee Surgicaltoughened up on its collection policy, with the result that all nondiscountcustomers paid on the 30th dayd. Suppose that the firm?s cost of carrying receivables was 8 percentannually. How much would the toughened credit policy save the firm inannual receivables carrying expense? (Assume that the entire amount ofreceivables had to be financed).


Paper#44801 | Written in 18-Jul-2015

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