Question from Dec 12 – Graffoff

This topic has 1 reply, 2 voices, and was last updated 11 years ago by Ken Garrett.

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November 5, 2014 at 7:22 pm #207872
jemma242
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I have completed the question above which is based on franchising but i have a question…

In the answer Receivable days = 260/1600 x 365 = 59.31 and it says that if the company used its average of 30 days it would release funding of $128,500.

Could you explain how this figure has been calculated please?

Thanks
Jemma
November 5, 2014 at 7:29 pm #207873
Ken Garrett
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Sales per day = 1600/365 = 4.3836

If collection period falls from 59.31 to 30, 29.31 days of sales will be received earlier.

4.3836 x 29.31 = 128.5
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