Faldo Corp Sells on Terms That Allow Customers 45 Days

question 105

Multiple Choice

Faldo Corp sells on terms that allow customers 45 days to pay for merchandise.Its sales last year were $325,000,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.

• A)21.27
• B)22.38
• C)23.50
• D)24.68
• E)25.91

---

Definitions:

Securities Act of 1933

A U.S. federal law enacted to ensure transparency and fairness in the securities market, requiring that investors receive significant information regarding securities being offered for public sale.

Due Diligence Defense

A legal defense whereby the defendant can avoid liability by proving that they took all possible steps to avoid committing an offence.

Registration Statement

A formal document filed with regulatory authorities that provides details about an investment offering for sale to the public, often associated with securities.

Investment Company Act of 1940

A U.S. federal law that regulates the organization and activities of investment companies, primarily focused on protecting investors.