Foundations of Financial Management
Foundations of Financial Management
16th Edition
ISBN: 9781259277160
Author: Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Publisher: McGraw-Hill Education
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Chapter 3, Problem 18P
Summary Introduction

To calculate: The average collection period of the firm.

Introduction:

Average collection period:

It refers to the average number of days between the time period of credit sales and that of receiving payment from invoiced customers. It ensures that the company has sufficient cash in hand to meet its financial requirements.

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A firm has sales of $1.4 million, and 10 percent of the sales are for cash. The year-end accounts receivable balance is $205,000.   What is the average collection period? (Use 365 days in a year. Do not round intermediate calculation. Round the final answer to the 1 decimal place.)   Average collection period             days 76thjbnn
Your company had net sales of $100,000 over the past year. One quarter of the sales were credit sales. During that time, average receivables were $5,000. The accounts receivable balance at the end of the year was $5,000. What was the average collection period? What is the average age of receivables (same answer!)? (Assume a 360-day year) O 18 days O 27 days O 36 days O 72 days O 60 days
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Foundations of Financial Management

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