If a firm pays its bills with a 30-day delay, what fraction of its purchases will be paid for in the current quarter? In the following quarter? What if its payment delay is 60 days?
It will pay 1/4 of its yearly bills each quarter -- no matter what its payment delay is.
With a 30-day delay, it will pay 2/3 of its current quarter's bills plus 1/3 of the previous quarter's bills.
Well, it seems like this firm has its own unique time management strategy. Let's break it down.
With a 30-day delay, in the current quarter, it will pay 2/3 of its bills. Why 2/3? Because let's face it, nobody really pays all their bills on time. And as for the previous quarter, it will pay 1/3 of those bills because they finally got around to it. Better late than never, right?
Now, let's move on to the following quarter. No matter what its payment delay is, this firm has a knack for paying 1/4 of its yearly bills each quarter. It's like they're playing this billing game on their own terms.
But wait, what if the payment delay is 60 days instead of 30? Well, hold onto your hats because the fractions remain the same. The firm will still pay 2/3 of its current quarter's bills and 1/3 of the previous quarter's bills. Apparently, even with extra time, they still manage to be fashionably late with payments.
So, in conclusion, no matter what the payment delay is, this firm has its own rhythm when it comes to paying bills. Just remember, timely payments are like the punchline to a good joke - they're always appreciated.
To calculate the fraction of purchases paid for in the current quarter, with a 30-day delay, you can use the following steps:
1. Determine the total bills for the year.
2. Divide the yearly bills by 4 to get the quarterly bills.
3. Multiply the quarterly bills by 2/3 to get the current quarter's bills.
4. Multiply the quarterly bills by 1/3 to get the previous quarter's bills.
So, if a firm pays its bills with a 30-day delay, the fraction of purchases paid for in the current quarter would be 2/3, and the fraction paid for in the previous quarter would be 1/3.
If the payment delay is 60 days, the same logic applies:
1. Determine the yearly bills.
2. Divide the yearly bills by 4 to get the quarterly bills.
3. Multiply the quarterly bills by 2/4 to get the current quarter's bills.
4. Multiply the quarterly bills by 2/4 to get the previous quarter's bills.
So, if the payment delay is 60 days, the fraction of purchases paid for in the current quarter would be 1/2, and the fraction paid for in the previous quarter would also be 1/2.
To understand how to calculate the fraction of purchases paid for in each quarter, we need to break down the timing and payment delay.
Let's start with a firm that has a payment delay of 30 days.
1. Current Quarter: The firm will pay 2/3 of its current quarter's bills within the same quarter. This means that if the firm makes $1000 worth of purchases in the current quarter, it will pay $666.67 (2/3 * $1000) in the same quarter.
2. Previous Quarter: The firm will also pay 1/3 of its previous quarter's bills in the current quarter. This means that if the firm had $1000 worth of bills from the previous quarter, it will pay $333.33 (1/3 * $1000) in the current quarter.
So, in total, the fraction of purchases paid for in the current quarter is (2/3 + 1/3) = 1 (or 100%).
Now let's consider the following quarter:
1. Current Quarter: In the following quarter, the firm will pay 2/3 of its bills for that quarter. Using the same example as above, if the firm makes $1000 worth of purchases in the following quarter, it will pay $666.67 (2/3 * $1000) in that quarter.
2. Previous Quarter: The firm will not pay any bills from the previous quarter in the following quarter because the payment delay is only 30 days. Therefore, the fraction of purchases paid for from the previous quarter in the following quarter is 0%.
Now, let's see how this changes if the payment delay is 60 days.
1. Current Quarter: The firm will still pay 2/3 of its current quarter's bills within the same quarter, as explained earlier.
2. Previous Quarter: With a payment delay of 60 days, the firm will now pay 2/3 of the bills from the previous quarter in the current quarter. Using the same example, if the firm had $1000 worth of bills from the previous quarter, it will pay $666.67 (2/3 * $1000) in the current quarter.
Therefore, in this case, the fraction of purchases paid for in the current quarter remains (2/3 + 1/3) = 1 (or 100%), just like before.
To summarize, irrespective of the payment delay (30 days or 60 days), the firm will always pay 1/4 of its yearly bills each quarter. However, the distribution between the current quarter's bills and the previous quarter's bills will vary based on the payment delay.