Faldo Corp Sells on Terms That Allow Customers 45 Days

question 21

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.Assume all sales to be on credit.Do not round your intermediate calculations.

• A) 18.13
• B) 17.01
• C) 26.86
• D) 22.38
• E) 17.46

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Definitions:

External Opportunities

Circumstances or factors outside an organization that it can exploit to achieve its strategic goals.

Turnaround Strategy

A plan aimed at recovering a company from a period of poor performance and financial health to positive growth and profitability.

Internal Weaknesses

Limitations or deficiencies within an organization that hinder its effectiveness or its ability to compete in the market.

Diversification

A risk management strategy that involves entering into new markets or adding new products to a company's portfolio to spread and reduce risks.