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?
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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?