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1)Quick Getaway Ltd has net income of $181,000, a profit margin of 9.50 percent, and an...

1)Quick Getaway Ltd has net income of $181,000, a profit margin of 9.50 percent, and an accounts receivable balance of $106,782. Assuming 76 percent of sales are on credit, what is the company's days' sales in receivables?

2)ou are scheduled to receive $34,000 in two years. When you receive it, you will invest it for 7 more years at 7 percent per year. How much will you have in 9 years?

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Homework Answers

Answer #1

PM = NI / Sales

0.0950 = $181,000 / Sales

Sales = $1,905,263.16

Credit sales = 0.76($1,905,263.16)

Credit sales = $1,448,000

Receivables turnover = Credit sales / Accounts receivable

Receivables turnover = $1,448,000 / $106,782

Receivables turnover = 13.56 times

Days’ sales in receivables = 365 days / Receivables turnover

Days’ sales in receivables = 365 / 13.56

Days’ sales in receivables = 26.92 days

2) FV = PV(1 + r)^t

FV = $34,000(1 + 0.07)^7

FV = $54,596.57

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