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A Firm Is Planning to Lower Its ACP by Ten

Question 113

Essay

A firm is planning to lower its ACP by ten days next year. Receivables are currently $15M on credit sales of $120M Credit sales are expected to grow by 20% next year. Calculate next year's ending receivables balance (make calculations using ending balances and a 360 day year).

Correct Answer:

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Current ACP = [15/120] × 360 = 45 days
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