Dome Metals has credit sales of $378,000 yearly with credit terms of net 60 days, which…

Dome Metals has credit sales of $378,000 yearly with credit
terms of net 60 days, which is also the average collection period.
Dome does not offer a discount for early payment, so its customers
take the full 60 days to pay
. a. What is the average receivables balance? (Use a 360-day
year.) AVERAGE RECIEBLES BALANCE
b. What is the receivables turnover? ? (Use a 360-day year.)
RECIEVABLES TURNOVER
Dome Metals has credit sales of $126,000 yearly. If Dome offers
a 4 percent discount for payment in 18 days, what would the average
accounts receivable balance be? Assume all customers would pay on
the last day of the discount period. (Use a 360-day year.)
AVERAE RECIEIVABLE BALANCE
Dome Metals has credit sales of $486,000 yearly with credit
terms of net 90 days, which is also the average collection
period.
a. Assume the firm offers a 4 percent discount for payment in 15
days and every customer takes advantage of the discount. Also
assume the firm uses the cash generated from its reduced
receivables to reduce its bank loans which cost 12 percent. What
will the net gain or loss be to the firm if this discount is
offered? (Use a 360-day year.)
NET CHANGE IN INCOME
b. Should the firm offer the discount?
Yes No Dome Metals has credit sales of $270,000
yearly with credit terms of net 90 days, which is also the average
collection period. Assume the firm adopts new credit terms of 2/15,
net 90 and all customers pay on the last day of the discount
period. Any reduction in accounts receivable will be used to reduce
the firm’s bank loan which costs 12 percent. The new credit terms
will increase sales by 20% because the 2% discount will make the
firm’s price competitive.
a. If Dome earns 15 percent on sales before discounts, what will
be the net change in income if the new credit terms are adopted?
(Use a 360-day year.) NET CHANGE IN INCOME
b. Should the firm offer the discount? No
Yes