Mace Auto Parts Company Sells to Retail Auto Supply Stores

question 56

Multiple Choice

Mace Auto Parts Company sells to retail auto supply stores on credit terms of "net 60." Annual credit sales are $300 million (spread evenly throughout the year) and its accounts average 28 days overdue.The firm's variable cost ratio is 0.75 (i.e., variable costs are 75 percent of sales) .When converting from annual to daily data or vice versa, assume there are 365 days per year.Suppose that Mace's sales are expected to increase by 20 percent next year and, through more effective collection methods, the firm is able to reduce its average collection period by 20 days.Determine the firm's average investment in receivables for next year under these conditions.

• A)$67,068,493
• B)$56,666,667
• C)$5,294,118
• D)$98,630

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Definitions:

American Ways

American Ways refer to the customs, behaviors, and cultural norms commonly associated with the American society.

Cross-cultural Negotiations

Negotiation processes that involve parties from different cultural backgrounds, requiring awareness and adaptation to cultural differences.

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The process of deliberation and compromise between countries to resolve disputes, strike deals, or establish treaties.