Faldo Corp Sells on Terms That Allow Customers 45 Days

question 108

Multiple Choice

Faldo Corp sells on terms that allow customers 45 days to pay for merchandise.Its sales last year were $425,000,and its year-end receivables were $60,000.If its DSO is less than the 45-day credit period,then customers are paying on time.Otherwise,they are paying late.By how much are customers paying early or late? Base your answer on this equation: DSO - Credit Period = Days early or late,and use a 365-day year when calculating the DSO.A positive answer indicates late payments,while a negative answer indicates early payments.Assume all sales to be on credit.Do not round your intermediate calculations.

• A) 5.16
• B) 8.10
• C) 6.20
• D) 6.53
• E) 6.73

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Definitions:

Quality

The degree to which a product, service, or process meets specified standards or fulfills customer requirements.

Money's Worth

The value received for the amount of money spent.

Control Chart

A statistical tool used to monitor, control, and improve process performance over time by identifying variations.

Standard Deviations

A measure of the amount of variation or dispersion of a set of values.