Average collection period

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Reference no: EM131016825

Universal Exports Inc. has a very attractive credit policy, and none of its customers pay in cash when the firm makes a sale.

Universal Exports Inc. sells to its customers on credit terms of 1/10, net 30.

1) If a customer bought $175,000 worth of goods and paid the firm in cash eight days after a sale, how much cash would Universal Exports Inc. get from the customer?

a. $183,750

b. $175,000

c. $273,250

d. $153,125

2. If the customer paid off the account after 15 days, Universal Exports Inc. would recieve_________.

a. $175,000

b. $140,000

c. $153,125

d. $ 183,750

3. Approximately 20% of Universal Exports Inc.'s customers take advatange of the discount and pay on the 10th day. The remaining 80% take an average of 35 days to pay off their accounts. What is Universal Exports Inc.'s days sales outstanding (DSO) or the average collection period?

a. 27.0 days

b. 31.5 days

c. 30.0 days

d. 33.0 days

Reference no: EM131016825

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