Answer:
The net credit position is -28,420 (thus, is i na debit position)
if the payment cycle increases to 37 days then, net credit position 40,800
The company improve its cash flow as is now delaying the paying of the purchases for more days thus, redducing his overall cash needs per year.
Explanation:
The net credit position is the difference between accounts receivable and accounts payable
Accounts receivable = average daily credit sales X average collection period receivable
Accounts receivable: 10,010 x 32 = 320,320
Accounts payable = average daily credit purchases X average payment period payable
Account Payable: 9,730 x 30 = 291,900
Accounts Receivable - Accounts Payable:
320,320 - 291,900 = 28,420
If the tiem period increases; then:
A/P = 9,730 x 37 = 361,120
position: 320,320 - 361,120 = 40,800
