The Brenmar Sales Company had a gross profit margin (grossprofits divided by ÷sales)of 34percent and sales of $ 8.2million last year. 78 percent of the firm’s sales are on credit, and the remainder are cash sales. Brenmar’s current assets equal $ 1.1million, its current liabilities equal $ 304,600and it has $103,600
in cash plus marketable securities.
a. If Brenmar’s accounts receivable equal $562,000,what is its average collection period?
b. If Brenmar reduces its average collection period to 25days, what will be its new level of accounts receivable?
c.Brenmar’s inventory turnover ratio is 9.5times. What is the level of Brenmar’s inventories?