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The Blawnox Company is concerned about its bad-debt losses and the length of time required to collect receivables. Current sales are $43.8 million per year. Bad-debt losses are currently 3.5 percent of sales, and the average collection period is 68 days (credit terms are "net 30"). One plan under consideration is to tighten credit standards by refusing to grant additional credit to any customers who are more than 15 days past due on their payments. This change in credit policy is expected to reduce sales by 10 percent but also reduce bad-debt losses to 2.5 percent of sales and reduce the average collection period to 40 days. The firm's variable cost ratio is 70 percent, and its required pretax rate of return on current assets investments is 18 percent. The company also expects its inventory investment to decrease by $1 million due to the anticipated decrease in sales. Determine the net effect of this plan on Blawnox's pretax profits.
The management of current assets and current liabilities in the short run can lead to several challenges for the financial manager. What are some of the more common challenges or problems encountered by the firm in this regard, and what are the p..
Write international finance paper... include how the global investment banking process has assisted goodyear 2. how regulatory bodies affect financial decision making 3. identify and evaluate contemporary issues in international financial manag..
What method should JP Products use to evaluate this project? Explain why you think this method is the best one to use.
a bank entered into a three-year interest rate swap for a notional amount of usd 250 million paying a fixed rate of 7.5
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1. what is the dollar amount of bad debt losses under the current policy? what would be the expected losses under the
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The Hamlin Corporation has an inventory conversion period of 60 days, a receivables collection period of 30 days, and a payables deferral period of 30 days. Its annual credit sales are $5,000,000, and its annual cost of goods sold (COGS) is 60% of..
Analyze the types of securities and financial markets and propose a new type of market that would be better than anything in existence today. Please be as creative as you like.
normally pays an annual dividend. the last such dividend paid was 3.00 all future dividends are expected to grow at 5
ABC Corporation has a machine that requires repairs or should be replaced. ABC has evaluated the two options and calculated the cash flows resulting from each option as follows:
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