Suppose that last year a firm had a dso of 35 days and, Ask an Expert

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Suppose that 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:

a. The dollar change in receivables

b. The implied reduced financing cost of the receivables (Assume a borrowing rate of 2.5%)

c. The change in the OC and CCP given that next year's DIH and DPO are expected to equal 45 days and 75 days, respectively.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91417508

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