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

Understand the significance of standard deviation in the context of investment returns.

Distinguish between arithmetic and geometric average returns and their applications.

Familiarize with the concept of dividend yield and its calculation.

Understand the foundation and principles of simulation, including its purpose and functionality.

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Definitions:

Experimentation

The process of conducting tests and trials to explore hypotheses, gather data, or demonstrate principles in controlled conditions.

Mental Process

Operations of the mind involving thinking, perceiving, remembering, and understanding, often influencing behavior.

Investigator

A person who carries out a systematic inquiry or study to discover facts or information.

Illusory Correlation

is the perception of a relationship between two variables even when no such relationship exists.