Piedmont Industries sells on terms of 2/10 net 30. Total sales for the year are $1.5 million. Thirty percent of customers pay on the 10th day and take discounts; the other 70% pay, on average, 60 days after their purchases. What would happen to average receivables if Piedmont toughened its collection policy with the result that all non-discount customers paid on the 40th day?
Piedmont Industries sells on terms of 2/10 net 30. Total sales for the year are $1.5 million. Thirty percent of customers pay on the 10th day and take discounts; the other 70% pay, on average, 60 days after their purchases. What would happen to average receivables if Piedmont toughened its collection policy with the result that all non-discount customers paid on the 40th day?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter21: Supply Chains And Working Capital Management
Section: Chapter Questions
Problem 6P
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Piedmont Industries sells on terms of 2/10 net 30. Total sales for the year are $1.5 million. Thirty percent of customers pay on the 10th day and take discounts; the other 70% pay, on average, 60 days after their purchases. What would happen to average receivables if Piedmont toughened its collection policy with the result that all non-discount customers paid on the 40th day?
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