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Question
Which of the following statements is false?
a. In addition to sales price, product quality, and advertising, credit policy is a major controllable variable which can affect product demand.
b. Sharp seasonal swings in sales and fast growth are two reasons why a firm's aging schedule and DSO may show high variability.
c. Changes in a firm's collection policy can affect sales and working capital but will not affect additional funds needed.
d. Cash discounts can be used to influence a firm's sales volume and its DSO.
e. Firms which offer credit terms with a cash discount usually seek two benefits: (1) to attract more customers, and (2) to reduce their DSO.
Answer
This answer is hidden. It contains 1 characters.
Related questions
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Q:
Refer to Foxy Ladies Investment Club. What was the portfolio's simple arithmetic average return per year from 2010 through 2012?
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The simple arithmetic average return for the common stock of Saltwater Expeditions Incorporated for the eight-year period from 2005 through 2012 was 21 percent. The one-year holding period returns from 2005 through 2011 are given below. What is the implied one-year holding period return for 2012?
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2006 22
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Use the information below to solve for the earnings per share for Adobe.
52 Weeks Yld Vol Net
Hi Lo Stock Sym % PE 100s Hi Lo Close Chg
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Q:
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The cash conversion cycle is the length of time from
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Q:
Reston Inc. has expected sales of $17,000,000. While 10 percent of its customers pay cash, the remaining 90 percent pay on credit with 40 percent paying on Day 10, 30 percent paying on Day 20, 15 percent paying on Day 25, and 15 percent paying on Day 30. Assume that the cost of funds invested in receivables is 10 percent. Suppose that the firm's customers begin paying later, such that the new DSO increases to 24 days, that the firm uses a 360-day year, and that the firm's variable cost ratio is 80 percent. What is the additional interest cost to Reston of the additional investment in A/R caused by the delay in payment by its customers? a. $19,550 b. $24,438 c. $42,500 d. $78,625 e. $102,000
Q:
Your firm buys on credit terms of 2/10, net 45, and it always pays on day 45. If you calculate that this policy effectively costs your firm $157,500 each year, what is the firm's average accounts payable balance?
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Q:
A firm purchases raw materials on June 1st. It converts the raw materials into inventory by the last day of the month, June 30th. However, it pays for the materials on June 15th. On July 31st, it sells the finished goods inventory. Then the firm collects cash from the sale one month later on August 31st. If this sequence accurately represents the firm's average working capital cycle, what is the firm's cash conversion cycle in days?
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Dixie Tours Inc. buys on terms of 2/15, net 30. It does not take discounts, and it typically pays 35 days after the invoice date. Net purchases amount to $720,000 per year. What is the approximate percentage cost of its non-free trade credit?
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b. 23.6%
c. 26.1%
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