Last year a firm had a dso of 35 days and annual revenues, Ask an Expert

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Last year a firm had a DSO of 35 days and annual revenues equal to $10,000,000. The treasury department has made it a goal to reduce the DSO to 30 days, while holding constant revenues. If this reduction is realized, then calculate the following:

Assume the firm uses the cash flow freed up by the reduction in DSO to reduce borrowed funds. If the interest rate on the firm's borrowed funds is 4.5% p.a., by how much will the annual interest paid by the firm be reduced?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92408360

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