Question

(Efficiency analysis) The Brenmar Sales Company had a gross profit margin (gross

profitsdivided by÷sales)

of

27

percent and sales of

$8.5

million last year.

73

percent of the firm's sales are on credit, and the remainder are cash sales. Brenmar's current assets equal

$1.1

million, its current liabilities equal

$303,200,

and it has

$100,400

in cash plus marketable securities.a. If Brenmar's accounts receivable equal

$563,200,

what is its average collection period?b. If Brenmar reduces its average collection period to

20

days, what will be its new level of accounts receivable?c. Brenmar's inventory turnover ratio is

8.6

times. What is the level of Brenmar's inventories?

a. If Brenmar's accounts receivable equal

$563,200,

what is its average collection period?The company's average collection period will be

nothing

days. (Round to two decimal places.)

Answer #1

**(a)-Average
Collection Period**

Average Collection Period = Accounts Receivables / Average Credit Sales per day

= $563,200 / [($8,500,000 x 73%) / 365 Days]

= $563,200 / $17,000.00 per day

= 33.13 Days

**(b)-New Level of
Accounts Receivables**

Average Collection Period = Accounts Receivables / Average Credit Sales per day

20.00 = Accounts Receivables / $17,000.00 per day

Accounts Receivables = $17,000.00 per day x 20 Days

Accounts Receivables = $340,000.00

**(c)-**
**Level of Brenmar's
inventories**

Cost of goods sold Ratio = 100% - Gross Profit Ratio

= 100% - 27%

= 73%

Cost of goods sold = Total Sales x Cost of goods sold Ratio

= $8,500,000 x 73%

= $6,205,000

Inventory Turnover ratio = Cost of goods sold / Inventories

8.60 Times = $6,205,000 / Inventories

Inventories = $6,205,000 / 8.60 Times

Inventories = $721,511.63

The Brenmar Sales Company had a gross profit margin (gross
profits divided by ÷sales) of 25 percent and sales of $ 9.5
million last year. 70 percent of the firm's sales are on credit,
and the remainder are cash sales. Brenmar's current assets equal
$ 1.3 million, its current liabilities equal $298,600, and it has
$104,200 in cash plus marketable securities.
a. If Brenmar's accounts receivable equal $563,200, what is
its average collection period?
b. If Brenmar reduces its...

The Brenmar Sales Company had a gross profit margin (gross
profits÷sales) of 34 percent and sales of $8.7 million last year.
70 percent of the firm's sales are on credit, and the remainder
are cash sales. Brenmar's current assets equal $1.4 million, its
current liabilities equal $295,900, and it has $109,500 in cash
plus marketable securities.
a. If Brenmar's accounts receivable equal $562,300, what is
its average collection period?
b. If Brenmar reduces its average collection period to 25...

The Tabor Sales Company had a gross profit margin (gross profits
divided by sales) of 30.7 percent and sales of $9.4 million last
year. Seventy-five percent of the firm's sales are on credit and
the remainder are cash sales. Tabor's current assets equal $2.7
million, its current liabilities equal $283000 , and it has $98000
in cash plus marketable securities.
a. If Tabor's accounts receivable are $562500 , what is its
average collection period?
b. If Tabor reduces its average...

(Evaluating liquidity) The Tabor Sales Company had a gross
profit margin (gross profits ÷ sales) of 30.0 percent and sales
of $9.0 million last year. Seventy-five percent of the firm's
sales are on credit and the remainder are cash sales. Tabor's
current assets equal $1.5 million, its current liabilities equal
$300,000, and it has $100,000 in cash plus marketable
securities.
a. If Tabor's accounts receivable are $562,500, what is its
average collection period?
b. If Tabor reduces its average collection...

(Evaluating liquidity) The Tabor Sales Company had a gross
profit margin (gross profits divided by ÷sales) of 30.4 percent
and sales of $9.2 million last year. Seventy-five percent of the
firm's sales are on credit and the remainder are cash sales.
Tabor's current assets equal $2.1 million, its current
liabilities equal $319,000, and it has $99,000 in cash plus
marketable securities.
a. If Tabor's accounts receivable are $562,500, what is its
average collection period?
b. If Tabor reduces its average...

?(Evaluatingliquidity?)
The Tabor Sales Company had a gross profit margin?
(grossprofitsdivided by÷?sales)of 30.3 percent and sales of ?$9.1
million last year.? Seventy-five percent of the? firm's sales are
on credit and the remainder are cash sales.? Tabor's current assets
equal ?$2.7 ?million, its current liabilities equal ?$310,000 and
it has 105,000 in cash plus marketable securities.
a. If? Tabor's accounts receivable are
?$562,500 what is its average collection? period?
b. If Tabor reduces its average collection
period to 24 ?days,...

?(Efficiency analysis) 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
40 days.
a. What is the maximum level of accounts receivable that ALei
can carry and have a 40?-day average collection? period?
b. If? ALei's current accounts receivable collection period is
60 ?days, how much would it have to reduce its level of accounts
receivable in order to...

A Corp. had total sales of $1,000,000 in 2018 (80 % of its sales
are credit). The company's gross profit margin is 20%, its ending
inventory is $100,000, and its accounts receivable balance is
$60,000. What additional amount of cash could the firm have
generated if it had increased its inventory turnover ratio to 10.0
and reduced its average collection period to 22.375 days. With the
same level of sales?

ALei Industries has credit sales of $ 153 million a year.
ALei's management reviewed its credit policy and decided that it
wants to maintain an average collection period of 45 days.
a. What is the maximum level of accounts receivable that ALei
can carry and have a 45-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...

ALei Industries has credit sales of $143 million a year. ?
ALei's management reviewed its credit policy and decided that it
wants to maintain an average collection period of 45 days.
a.What is the maximum level of accounts receivable that ALei can
carry and have a 45?-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 45...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 2 minutes ago

asked 2 minutes ago

asked 8 minutes ago

asked 13 minutes ago

asked 13 minutes ago

asked 15 minutes ago

asked 21 minutes ago

asked 38 minutes ago

asked 38 minutes ago

asked 39 minutes ago

asked 46 minutes ago

asked 57 minutes ago