Economy current average collection period

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Company has the following data for the year Sales $100000 Cost of goods sold $40000 EBIT $30000 Interest expense $10000 Net income $17000 Total current assets $64000 Cash $25000 Account revivable $20500 Inventory $15000 A. What is the economy's current average collection period? B. If the company unhappy with its current average collection, times interest earned ratio and the net profit margin ratio, and they will be looking to improve them in the year. The CFO had proposed the following: " reduce the average collection period 27 day's to match the industry average collection period and to invest any cash freed-up from the account receivables this charge in an account that will earn them an 8% interest " If the company implemented the CFO's proposal what will be the company's new times interest earned ratio and the net profit margin ratio in the year 2013 (assume that the year 2013 sales and cost of goods sold will remain constant)

Reference no: EM131155706

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