posted by meimei .
hey...last one please..please...the accelerating colection..please...
Doria's Corporation makes sales of $2,160,000 per annum. The average age of accounts recievable is 30 days. Management considers shortening credit terms by 10 days. Cost of money is 18%
how much will the company save from financing charges?(assume 360-day per year)
.thank you very much!thank you!
If they are paid 10 days sooner on the annual sales of $2,160,000 per annum, their bank (or bond) financing interest costs are reduced by (10/360)*0.18*$2,160,000 per annum = $10,800. This shows up as a saving.
thank you very much drwls...^^
ur the best!