The Essex Company Found That an Average of 10 Days

question 34

Multiple Choice

The Essex Company found that an average of 10 days elapses between the time a customer's payments are received and the deposited funds clear the customer's bank and become usable by the firm. Essex's annual sales are $240 million. (Assume 365 days per year when converting from annual data to daily data or vice versa.) What is the increase in Essex's average cash balance, assuming it can reduce the time required to process customer payments by 3 days through more efficient payment processing methods?

• A) $666,667
• B) $120,000,000
• C) $1,972,603
• D) $270,000

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