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boyakko [2]
3 years ago
10

Garcia Industries has sales of $167,500 and accounts receivable of $18,500, and it gives its customers 25 days to pay. The indus

try average DSO is 27 days, based on a 365-day year. If the company changes its credit and collection policy sufficiently to cause its DSO to fall to the industry average, and if it earns 8.0% on any cash freed-up by this change, how would that affect its net income, assuming other things are held constant? Assume all sales to be on credit.
Business
1 answer:
Vikki [24]3 years ago
7 0

Answer:

the company can earn an additional $488.80 on interest

Explanation:

total sales on credit = $167,500

interest rate = 8%

accounts receivable = $18,500

sales per day = $167,500 / 365 days = $458.90 per day

days sales outstanding (DSO) = ($18,500 / $167,500) x 365 days = 40

average industry DSO = 27 days

to determine the value of accounts receivable to match the industry's DSO:  (AR / $167,500) x 365 = 27

AR = 27 x ($167,500 / 365) = $12,390

So accounts receivable must lower by ⇒ $18,500 - $12,390 = $6,110

that $6,110 should earn 8% interest = $6,110 x 0.08 = $488.80

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natita [175]
There's actually 7 one of which is "Blowin in the wind"
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3 years ago
39. You expect to receive $5,000 in 25 years. How much is it worth today if the discount rate is 5.5%?
ivann1987 [24]

Answer:

PV= $1,311.17

Explanation:

Giving the following information:

Future Value (FV)= $5,000

Number of periods (n)= 25 years

Interest rate (i)= 5.5% compounded annually

T<u>o calculate the present value (PV), we need to use the following formula:</u>

<u></u>

PV= FV / (1+i)^n

PV= 5,000 / 1.055^25

PV= $1,311.17

6 0
3 years ago
Deal or No Deal. You are a contestant with 5 suitcases left: $1 $30,000 $100,000 $300,000 $750,000 The bank offers you $250,000
Leviafan [203]

Answer:

Deal

Explanation:

Amount of cash left in the 5 Suitcase = $1 , $30000, $100000, $300000, $750000

The probability of selecting each bad is equal and it is 1/5

Thus, the expected value of prize = 0.2(1+30000+100000+300000+750000)

= 0.2 * 1180001

= $236,000.2 0

Since the bank is offering amount of $250,000 which is greater than the expected value, then it is considered as a deal.

3 0
2 years ago
the baldwin Company currently has the following balances on their balance sheetTotal Assets $225,232 Total Liabilities136,748 Re
Tanya [424]

Answer:

see below

Explanation:

Common stock = Assets - Liabilities - Retained earnings

Assets next year = $225,232 + $55,000 = $280,232

Liabilities remain unchanged

Retained earnings = Opening retained earnings + Net income - Dividends

= $36,493 + $44,200 - $12,000

= $68,693

Common stock next year

= $280,232 - $136,748 - $68,693

= $74,791

6 0
2 years ago
4. People in the organisations carry out diverse tasks with the aim to achieve
Umnica [9.8K]

Answer:

(b) Common objectives

Explanation:

People and departments in an organization perform different functions, but all focus on achieving its objectives. An organization's top management sets the goals and targets for a particular period. It then identifies specific actions that need to be accomplished to achieve the set goals.

The identified actions are distributed to various departments for implementation. Each department will break down its activities into small tasks and assign them to individual workers. Every employee will be working to achieve their set objectives. If all workers achieve their targets, the departments will meet their objectives, and so is the organization's goals.

6 0
2 years ago
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