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Lamar Lumber Company has sales of $9 million per year, all on credit terms calling for payment within 30 days, and its accounts receivable are $2.25 million. Assume 365 days in the year for your calculations. 1. What is Lamar's DSO? 2. What would DSO be if all customers paid on time? 3. How much capital would be released if Lamar could take actions that led to on-time payments?

Lamar Lumber Company has sales of $9 million per year, all on credit terms calling for payment within 30 days, and its accounts receivable are $2.25 million. Assume 365 days in the year for your calculations. 1. What is Lamar's DSO? 2. What would DSO be if all customers paid on time? 3. How much capital would be released if Lamar could take actions that led to on-time payments?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Lamar Lumber Company has sales of $9 million per year, all on credit terms calling for payment within 30 days, and its accounts receivable are $2.25 million. Assume 365 days in the year for your calculations. 1. What is Lamar's DSO? 2. What would DSO be if all customers paid on time? 3. How much capital would be released if Lamar could take actions that led to on-time payments?
Transcribed Image Text:Lamar Lumber Company has sales of $9 million per year, all on credit terms calling for payment within 30 days, and its accounts receivable are $2.25 million. Assume 365 days in the year for your calculations. 1. What is Lamar's DSO? 2. What would DSO be if all customers paid on time? 3. How much capital would be released if Lamar could take actions that led to on-time payments?
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