FUND.OF CORP.FIN.(LL)-W/ACCESS >CUSTOM<
FUND.OF CORP.FIN.(LL)-W/ACCESS >CUSTOM<
11th Edition
ISBN: 9781260100259
Author: Ross
Publisher: MCG CUSTOM
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Chapter 18, Problem 9CRCT

Use the following information to answer Questions 6–10: Last month, BlueSky Airline announced that it would stretch out its bill payments to 45 days from 30 days. The reason given was that the company wanted to “control costs and optimize cash flow.” The increased payables period will be in effect for all of the company’s 4,000 suppliers.

9. Payables Period [LO1] Why don’t all firms simply increase their payables periods to shorten their cash cycles?

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2. Harrelson Inc. currently has $750,000 in accounts receivable. Its days sales outstanding (DSO) is 55 days. It wants to reduce its DSO to the industry average of 35 days by pressuring customers to pay on time. The Chief Financial Officer (CFO) estimates that average sales will fall by 15% if the policy is adopted. Assuming the firms achieves the DSO of 35 days and suffers the 15% sales decline, what will be the new level of accounts receivable? Assume 1 year =365 days
Logan Manufacturing currently has $1,000,000 in accounts receivable. Its days sales outstanding (DSO) is 50 days. It wants to reduce its DSO to the industry average of 30 days by pressuring customers to pay on time. The Chief Financial Officer (CFO) estimates that average sales will fall by 10% if the policy is adopted. Assuming the firms achieves the DSO of 30 days and suffers the 10% sales decline, what will be the new level of accounts receivable? Assume 1 year =365 days
4. Ruth Company currently has $1,000,000 in accounts receivable. Its days sales outstanding (DSO) is 50days. The company wants to reduce its DSO to the industry average of 32 days by pressuring more ofits customers to pay their bills on time. The company’s CFO estimates that if this policy is adopted thecompany’s average sales will fall by 10 percent. Assuming that the company adopts this change andsucceeds in reducing its DSO to 32 days and does lose 10 percent of its sales, what will be the level ofaccounts receivable following the change? Assume a 365-day year.

Chapter 18 Solutions

FUND.OF CORP.FIN.(LL)-W/ACCESS >CUSTOM<

Ch. 18.4 - Prob. 18.4ACQCh. 18.4 - Prob. 18.4BCQCh. 18.5 - Prob. 18.5ACQCh. 18.5 - Describe two types of secured loans.Ch. 18.6 - Prob. 18.6ACQCh. 18.6 - In Table 18.6, what would happen to Fun Toys...Ch. 18 - Prob. 18.1CTFCh. 18 - A firm has an operating cycle of 64 days and a...Ch. 18 - Prob. 18.4CTFCh. 18 - Prob. 18.5CTFCh. 18 - Operating Cycle [LO1] What are some of the...Ch. 18 - Prob. 2CRCTCh. 18 - Prob. 3CRCTCh. 18 - Cost of Current Assets [LO2] Loftis Manufacturing,...Ch. 18 - Operating and Cash Cycles [LO1] Is it possible for...Ch. 18 - Use the following information to answer Questions...Ch. 18 - Use the following information to answer Questions...Ch. 18 - Prob. 8CRCTCh. 18 - Use the following information to answer Questions...Ch. 18 - Use the following information to answer Questions...Ch. 18 - Changes in the Cash Account [LO4] Indicate the...Ch. 18 - Prob. 2QPCh. 18 - Changes in the Operating Cycle [LO1] Indicate the...Ch. 18 - Prob. 4QPCh. 18 - Calculating Cash Collections [LO3] The Morning...Ch. 18 - Prob. 6QPCh. 18 - Prob. 7QPCh. 18 - Calculating Payments [LO3] Sedman, Corp., has...Ch. 18 - Calculating Payments [LO3] The Torrey Pine...Ch. 18 - Calculating Cash Collections [LO3] The following...Ch. 18 - Calculating the Cash Budget [LO3] Here are some...Ch. 18 - Prob. 12QPCh. 18 - Prob. 13QPCh. 18 - Prob. 14QPCh. 18 - Calculating the Cash Budget [LO3] Wildcat, Inc.,...Ch. 18 - Prob. 16QPCh. 18 - Costs of Borrowing [LO3] In exchange for a 400...Ch. 18 - Prob. 18QPCh. 18 - Prob. 1MCh. 18 - Prob. 2MCh. 18 - Prob. 3M
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