The Brenmar Sales Company had a gross profit margin (gross profits divided by ÷s

Question

The Brenmar Sales Company had a gross profit margin (gross profits divided by ÷sales) of 25 percent and sales of $9.5 million last year. 71 percent of the firm's sales are on credit, and the remainder are cash sales. Brenmar's current assets equal $1.4 million, its current liabilities equal $303,000, and it has $100,400 in cash plus marketable securities. a. If Brenmar's accounts receivable equal $563,300, what is its average collection period? b. If Brenmar reduces its average collection period to 15 days, what will be its new level of accounts receivable? c.Brenmar's inventory turnover ratio is 8.8 times. What is the level of Brenmar's inventories?

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up   Statementshowing Computations Paticulars Amount Credit Sales = 9.5m*.71         6,745,000.00 Accounts receivable            563,300.00 Accounts receivable turnover                         11.97 average collection period = 365/11.97                       30.48 b) Average collection period                       15.00 Account receivable turnover = 365/15                       24.33 c) COGS = 9.5m*.75         7,125,000.00 Inventory turnover                         8.80 Average iNventories            809,659.09

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