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Brittany
Brittany, Professional
Category: Homework
Satisfied Customers: 1922
Experience:  AA/Accounting BS/Business
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I have finance question, I have already done the work, but

Resolved Question:

I have finance question, I have already done the work, but I believe that I am wrong. Can you revise it for me? It is on excell spread sheet about incremendal investments.
Submitted: 2 years ago.
Category: Homework
Expert:  Brittany replied 2 years ago.

Brittany :

Hi Jacustomer, Just send the info over and I will take a look...Thanks!

Customer:

Collins Office Supplies is considering a more liberal credit policy to increase sales, but expects that 9 percent of the new accounts will be uncollectible. Collection costs are 5 percent of new sales; production and selling costs are 78 percent; and accounts receivable turnover is five times. Assume income taxes of 30 percent and an increase in sales of $80,000. No other asset buildup will be required to service the new accounts.


 


a. What is the level of accounts receivable to support this sales expansion?


b. What would be Collin's incremental aftertax return on investment?


c. Should Collins liberalize credit if a 15 percent aftertax return on investment is required?


 


Assume that Collins also needs to increase its level of inventory to support new sales and that inventory turnover is four times.


 


d. What would be the total incremental investment in accounts receivable and inventory to support a $80,000 increase in sales?


e. Given the income determined in part b and the investment determined in part d, should Collins extend more liberal credit terms?

Customer:

Here is the question I will upload what I have so far on my excel spreadsheet and let me know what you think.

Customer:

here is what I have http://www.sendspace.com/file/fk5e8m

I have done the work but need it double checked, and if need be we can discuss price

Brittany :

Hi Jacustomer, Is your stuff just the written answers and the yellow highlighted cells?

Brittany :

Hi Jacustomer, Here is your answer: Please click here I read the rubrics so didnt change anything but the written stuff in the box and the yellow cells.

Brittany, Professional
Category: Homework
Satisfied Customers: 1922
Experience: AA/Accounting BS/Business
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