The Tate Corporation has annual sales of $47 million. The average collection per

Question

The Tate Corporation has annual sales of $47 million. The average collection period is 36
days. What is the average investment in accounts receivables as shown on the balance sheet?
A. $4,730,520
B. $4,635,616
C. $4,835,400
D. $4,563,116
E. $4,653,616
Lipman, Inc., has an average collection period of 39 days. Its average daily investment in
receivables is $47,500. What are annual credit sales? What is receivable turnover?
A. $444,555; 9.4
B. $446,551; 8.8
C. $444,940; 5.5
D. $444,551; 9.4
E. $444,515; 8.8

Suppose the current exchange rate for the Polish zloty is Z4.27. The expected exchange rate
in three years is Z4.51. What is the difference in the annual inflation rates for the United States
and Poland over this period? Assume the anticipated rate is constant for both countries. What
relationship are you relying on in answering this question?
A. 1.51
B. 1.84
C. 1.48
D. 1.15
E. 1.86

Explanation / Answer

1. B. 4,635,616 47,000,000/(365/36) = 4,635,616 2. D. 444,551; 9.4 47,500*(365/39) = 444,551 444,551/47,500 = 9.4 3. B. 1.84 Time value of money. Calculator: PV is 4.27, FV is -4.51, n is 3, payment is 0, end of period, solve for interest rate and get 1.84.

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