The Quick Corp

question 94

Essay

The Quick Corp.has implemented procedures to cut 1.5 days from their cash collection process.Annual sales (all charge sales) are $30 million and the opportunity cost of funds is 9 percent.What is the value of the annual savings, and how much would the savings be worth if the speed-up in collections can be considered permanent?

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Definitions:

Net Income

The sum a company is left with after all its expenses and taxes are removed from its income.

Crossover Point

The point at which two different financial scenarios yield the same result or where an investment's cost and benefits intersect.

Cash Inflows

Money or funds received by a business during a period of time from various sources including sales, investments, and financing.