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Question

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Explanation / Answer

a)Average collection period will be 30% in 10days              30%*10 40% in 30days              40%*30 30% in 40days              30%*40 Average collection period 27 days b) Current Receivable Balances = $1,200,000 * 27/365                                                 = $88,767 C) 30% in 10days              30%*10 70% in 30days              70%*30 Average collection period 24 days New receivable balances = $1,200,000 * 24/365                                       = $78,904 D) Initial carrying Expense   7,101 New carrying Expense   6,312 AmountSave                   789

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