Question

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 days, what will be its new level of accounts​ receivable?

c.  ​Brenmar's inventory turnover ratio is 8.1 times. What is the level of​ Brenmar's inventories?

Answer 1