Fundamentals of Corporate Finance
11th Edition
ISBN: 9780077861704
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
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Chapter 3, Problem 3QP
Calculating the Average Collection Period [LO2] Aguilera Corp. has a current accounts receivable balance of $438,720. Credit sales for the year just ended were $5,173,820. What is the receivables turnover? The days’ sales in receivables? How long did it take on average for credit customers to pay off their accounts during the past year?
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Calculating the Average Collection Period Trout Lumber Yard has a current accounts receivable balance of $527,164. Credit sales for the year just ended were $6,787,626. What is the receivables turnover? The days’ sales in receivables? How long did it take, on average, for credit customers to pay off their accounts during the past year?
A. Assume that all sales are on account. If sales revenue was $18,000,000 and the average days in accounts receivable was 38 days for the last operating year, what would the average accounts receivable balance have been?
a. $1,680,000
b. $1,500,000
c. $1,875,000
d. $18,000,000
B. If accounts receivable is projected to be $800,000 at the beginning of the next operating year and $1,100,000 at the end of the next operating year: would cash be generated by accounts receivable or needed to fund accounts receivable? And, by how much?
a. $300,000 of cash needed to fund accounts receivable
b. $1,100,000 of cash needed to fund accounts receivable
c. $500,000 of cash needed to fund accounts receivable
d. $300,000 of cash generated by accounts receivable
5. Krackle Korn Inc. had credit sales of $3.500.000 last year and its days sales
outstanding was DSO = 35 days. What was its average receivables balance, based on a
365-day year?
Chapter 3 Solutions
Fundamentals of Corporate Finance
Ch. 3.1 - Prob. 3.1ACQCh. 3.1 - Prob. 3.1BCQCh. 3.2 - Prob. 3.2ACQCh. 3.2 - Name two types of standardized statements and...Ch. 3.3 - What are the five groups of ratios? Give two or...Ch. 3.3 - Given the total debt ratio, what other two ratios...Ch. 3.3 - Turnover ratios all have one of two figures as the...Ch. 3.3 - Profitability ratios all have the same figure in...Ch. 3.4 - Return on assets, or ROA, can be expressed as the...Ch. 3.4 - Return on equity, or ROE, can be expressed as the...
Ch. 3.5 - Prob. 3.5ACQCh. 3.5 - Prob. 3.5BCQCh. 3.5 - Prob. 3.5CCQCh. 3.5 - Prob. 3.5DCQCh. 3 - Prob. 3.1CTFCh. 3 - Prob. 3.2CTFCh. 3 - What is the correct formula for computing the...Ch. 3 - Prob. 3.5CTFCh. 3 - Current Ratio [LO2] What effect would the...Ch. 3 - Current Ratio and Quick Ratio [LO2] In recent...Ch. 3 - Prob. 3CRCTCh. 3 - Prob. 4CRCTCh. 3 - Prob. 5CRCTCh. 3 - Prob. 6CRCTCh. 3 - Prob. 7CRCTCh. 3 - Prob. 8CRCTCh. 3 - Prob. 9CRCTCh. 3 - Industry-Specific Ratios [LO2] There are many ways...Ch. 3 - Prob. 11CRCTCh. 3 - Prob. 12CRCTCh. 3 - Calculating Liquidity Ratios [LO2] SDJ, Inc., has...Ch. 3 - Calculating Profitability Ratios [LO2] Shelton,...Ch. 3 - Calculating the Average Collection Period [LO2]...Ch. 3 - Calculating Inventory Turnover [LO2] The Green...Ch. 3 - Calculating Leverage Ratios [LO2] Levine, Inc.,...Ch. 3 - Calculating Market Value Ratios [LO2] Makers Corp....Ch. 3 - DuPont Identity [LO4] If Roten Rooters, Inc., has...Ch. 3 - DuPont Identity [LO4] Zombie Corp. has a profit...Ch. 3 - Prob. 9QPCh. 3 - Prob. 10QPCh. 3 - Prob. 11QPCh. 3 - Equity Multiplier and Return on Equity [LO3] SME...Ch. 3 - Just Dew It Corporation reports the following...Ch. 3 - Prob. 14QPCh. 3 - Prob. 15QPCh. 3 - Prob. 16QPCh. 3 - Calculating Financial Ratios [LO2] Based on the...Ch. 3 - Using the DuPont Identity [LO3] Y3K, Inc., has...Ch. 3 - Days Sales in Receivables [LO2] A company has net...Ch. 3 - Ratios and Fixed Assets [LO2] The Caughlin Company...Ch. 3 - Profit Margin [LO4] In response to complaints...Ch. 3 - Return on Equity [LO2] Firm A and Firm B have...Ch. 3 - Calculating the Cash Coverage Ratio [LO2] Ugh...Ch. 3 - Cost of Goods Sold [LO2] W B Corp. has current...Ch. 3 - Prob. 25QPCh. 3 - Some recent financial statements for Smolira Golf...Ch. 3 - DuPont Identity [LO3] Construct the DuPont...Ch. 3 - Prob. 28QPCh. 3 - Market Value Ratios [LO2] Smolira Golf Corp. has...Ch. 3 - Tobins Q [LO2] What is Tobins Q for Smolira Golf?...Ch. 3 - Using the financial statements provided for SS...Ch. 3 - Mark and Todd agree that a ratio analysis can...Ch. 3 - Compare the performance of SS Air to the industry....
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- trout lumber Yard has a current accounts receivable balance of $442016. Credit sales for the year just ended were $9358610 a. What is the receivables turnover? b. What is the day's receivables? c. How long did it take on average for credit customers to pay off their accounts during the past year? a. Receivables turnover _____ times b. Days sales in receivables ____ days c. Average collection period_____ daysarrow_forwardYour 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 daysarrow_forward7. Assuming a 365-day year, how long (in average days) does the collectibles from customers stay as outstanding accounts receivable if Company Z has a total sale of $1,800,000 of which $200,000 are cash sales and the beginning and ending accounts receivable balances are $30,000 and $50,000, respectively. 11.40 days O 9.13 days 6.84 days 8.11 daysarrow_forward
- The accounts receivable turnover ratio of a company is 2; if its annual credit sales is $ 719550, what is the average value of outstanding credit (or value of accounts receivable)? If the company operates 355 a year, what is the average number of days it takes to get a credit sale paid? Average outstanding credit = $| (Round to TWO places of decimal) Average number of days to get payment on a credit sale =| (Round to the nearest integer)arrow_forward9. Company S purchased 1,000 units raw materials amounting to $5,000 and used $4,500 worth for the production during the current month. The standard price for these raw materials is $5.2 per unit. How much is the materials price variance for the current month if Company S analyzes the variance at the point of purchase? O $200 favorable O $200 unfavorable O $700 favorable O $700 unfavorable 10. T Corporation is authorized to issue 500,000 common stock at $10 par value. As of December 31, 2019 the corporation has 350,000 common stock issued and outstanding. On February 14, 2020, the market price of the stock is $17. On the same date, T Corporation acquired 50,000 stocks at $15. On March 5, 2020, the company reissued 25% of the treasury stocks at $20. Which of the following will be included in the entry to record the transaction on March 5, 2020? Debit Treasury Shares $187,500 Debit Common Stock $250,000 O Credit Additional Paid-in Capital $62,500 O Credit Cash $250,000arrow_forwardPlease Solve This Question 1. Medwing Corporation has a DSO of 19 days. The company averages 5,500 in credit sales each day. What is the company’s average accounts receivable?arrow_forward
- A firm has accounts receivables of R352 476, sales just ended of R3 050 291. What is the average collection period? Assume 365 days in a yeararrow_forwardTwist Corp. has a current accounts receivable balance of $357,615. Credit sales for the year just ended were $2,936,600. a. What is the receivables turnover? b. What is the days' sales in receivables?arrow_forwardA firm had credit sales of $15,750,000 last year and its days sales outstanding was 65 days. What was its average receivables balance, based on a 365-day year? 1. $1,294,521 2. $3,412,500 3. $7,269,231 4. $2,804,795 5. $4,389,657arrow_forward
- Ancient Grains Unlimited has an accounts receivable turnover ratio of 3.34 times. The net credit sales for the year are $567,920. What is the days sales in receivables ratio for 2018 (rounded to the nearest whole number)? A. 190 days B. 109 days C. 110 days D. 101 daysarrow_forwardCC2) La Reina de Oriente, S.A., a company that sells sausages, knows that it pays its suppliers 10 times a year. To determine the average collection period it is known that the annual sales of the company were $5'183,220.00, of which 70% are on credit and the average balance of customers is $382,982.37, that is to say it is necessary to calculate the turnover of accounts receivable; and the average age of inventory is based on the inventory turnover, whose data to calculate it as the previous one are: Average inventory 153,192.95 and its annual cost of sales amounts to $1'002,716.78. The company spends about $12.5 million in operating cycle investments. It plans to make modifications to its policies so that it can reduce its PPC by 5 days, and its EPI by one (before converting it to days). Negotiations with your supplier to extend payment terms have not been successful. With these data you have to calculate: 5) The operating cycle.6) The cash conversion cycle.7) Cash turnover.8) The…arrow_forwardA company had Sales and Cost of Sales last year of $600 million and $300 million respectively. All sales were on credit terms. If its customers paid their invoices on average at 16 days, what is the company’s average Accounts Receivable balance? (Assume a 365-day year.) a. $26.3 million b. $13.1 million c. $9.4 million d. $18.7 millionarrow_forward
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