ALei Industries has credit sales of $141 million a year. ALei\'s management revi

Question

ALei Industries has credit sales of $141 million a year. ALei's management reviewed its credit policy and decided that it wants to maintain an average collection period of 40 days. What is the maximum level of accounts receivable that ALei can carry and have a 40-day average collection period? If ALei's current accounts receivable collection period is 50 days, how much would it have to reduce its level of accounts receivable in order to achieve its goal of 40 days? What is the maximum level of accounts receivable that ALei can carry and have a 40-day average collection period? The maximum level of accounts receivable will be $ million. (Round to one decimal place.) If ALei's current accounts receivable collection period is 50 days, how much would it have to reduce its level of accounts receivable in order to achieve its goal of 40 days? ALei needs to reduce its accounts receivable by $ million. (Round to one decimal place.)

Explanation / Answer

         = 141 Million x 40/365

         = 15.5 Million

=19.3 Million

Reduction in accounts receivables = Accounts receivables for 50 days period - Accounts   receivables for 40 days period

                                                                = 19.3 million -15.5 million

                                                                =3.8 million

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.