What is the maximum level of accounts receivable that ALei can carry and have a 35-day average collection period? b. If ALei's current accounts receivable collection period is 55 days, how much would it have to reduce its level of accounts receivable in order to achieve its goal of 35 days?

What is the maximum level of accounts receivable that ALei can carry and have a 35-day average collection period? b. If ALei's current accounts receivable collection period is 55 days, how much would it have to reduce its level of accounts receivable in order to achieve its goal of 35 days?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter18: The Management Of Accounts Receivable And Inventories

Section: Chapter Questions

Problem 10P

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Question

ALei Industries has credit sales of

$146

million a year. ALei's management reviewed its credit policy and decided that it wants to maintain an average collection period of

days.

a. What is the maximum level of accounts receivable that ALei can carry and have a

35-day

average collection period?

b. If ALei's current accounts receivable collection period is

days, how much would it have to reduce its level of accounts receivable in order to achieve its goal of

days?

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