Corporate Finance (The Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
11th Edition
ISBN: 9780077861759
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher: McGraw-Hill Education
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Chapter 28, Problem 7QP
Size of Accounts Receivable Essence of Skunk Fragrances, Ltd., sells 5,450 units of its perfume collection each year at a price per unit of $480. All sales arc on credit with terms of 1/10, net 40. The discount is taken by 35 percent of the customers. What is the total amount of the company’s accounts receivable? In reaction to sales by its main competitor, Sewage Spray, Essence of Skunk is considering a change in its credit policy to terms of 2/10, net 30 to preserve its market share. How will this change in policy affect accounts receivable?
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Students have asked these similar questions
Essence of Skunk Fragrances, Limited, sells 9,300 units of its perfume collection each
year at a price per unit of $415. All sales are on credit with terms of 1/10, net 40. The
discount is taken by 45 percent of the customers.
a. Calculate the average collection period. (Do not round intermediate calculations and
round your answer to 2 decimal places, e.g., 32.16.)
b. What is the receivables turnover? (Use 365 days a year. Do not round intermediate
calculations and round your answer to 4 decimal places, e.g., 32.1616.)
c. What is the amount of the company's average receivable? (Do not round
intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
a. Average collection period
b. Receivables turnover
c. Average receivables
days
times
Calculate the average collection period, average payment period, inventory turnover period and cash
conversion cycle for the following firm (1Year = 360 Days): Income statement data: Sales 10000,
COGS 9000 Balance sheet data: Inventory 1100, Accounts receivable 400, Accounts payable 600 What
effect will all the following activities have on the cash conversion cycle? the company reduces the level
of inventory by 10%, the company changes the terms of sale and 60% of customers pay after 5 days
while the remaining pay after 30 days (with sales on the same level) and the company has extended
its own payment conditions by one week.
Essence of Skunk Fragrances, Limited, sells 4,000 units of its perfume collection each i
year at a price per unit of $500. All sales are on credit with terms of 2/10, net 30. The
discount is taken by 70 percent of the customers. What is the amount of the company's
accounts receivable?
Multiple Choice
$54,794.52
$83,287.67
$49,315.07
$87671.23
$92.054.79
Chapter 28 Solutions
Corporate Finance (The Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Ch. 28 - Prob. 1CQCh. 28 - Trade Credit forms In what form is trade credit...Ch. 28 - Prob. 3CQCh. 28 - Five Cs or Credit What arc the five Cs of credit?...Ch. 28 - Credit Period Length What are some of the factors...Ch. 28 - Credit Period Length In each of the following...Ch. 28 - Inventory Types What are the different inventory...Ch. 28 - Just-in-Time Inventory If a company moves to a JIT...Ch. 28 - Inventory Costs If a companys inventory carrying...Ch. 28 - Inventory Period At least part of Dells corporate...
Ch. 28 - Prob. 1QPCh. 28 - Size of Accounts Receivable The Paden Corporation...Ch. 28 - ACP and Accounts Receivable Kyoto Joe, Inc., sells...Ch. 28 - Size of Accounts Receivable Tidwell, Inc., has...Ch. 28 - Terms of Sale A firm offers terms of 1/10, net 30....Ch. 28 - ACP and Receivables Turnover Chen, Inc., bas an...Ch. 28 - Size of Accounts Receivable Essence of Skunk...Ch. 28 - Size of Accounts Receivable The Arizona Bay...Ch. 28 - Evaluating Credit Policy Air Spares is a...Ch. 28 - Credit Policy Evaluation Leeloo, Inc., is...Ch. 28 - EOQ Fhloston Manufacturing uses 1,860 switch...Ch. 28 - EOQ The Trektronics store begins each week with...Ch. 28 - EOQ Derivation Prove that when carrying costs and...Ch. 28 - Credit Policy Evaluation The Harrington...Ch. 28 - Credit Policy Evaluation Happy Times currently has...Ch. 28 - Credit Policy The Silver Spokes Bicycle Shop has...Ch. 28 - Break-Even Quantity In Problem 14, what is the...Ch. 28 - Prob. 18QPCh. 28 - Prob. 19QPCh. 28 - Safety Stocks and Order Points Sach, Inc., expects...Ch. 28 - Evaluating Credit Policy Solar Engines...Ch. 28 - Evaluating Credit Policy In the previous problem,...Ch. 28 - Prob. 1MC
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