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Rangala Corp - customers paying late or early - 22 Jul, 2012

Rangala Corp sells on terms that allow customers 30 days to pay for merchandise. Its sales last year were $450,000, and its year-end receivables were $45,000. If its DSO is less than the 30 day credit period, then customers are paying on time. Otherwise, they are paying late. By how much are customers paying early or late? Base your answer on this equation: DSO - Credit Period = days early or late, and use a 365 day year when calculating the DSO. A positive answer indicates late payments.



Category : Financial Management

Search Keywords :
Rangala , Customers , Merchandise , DSO , Days , Late , Early , Credit , Period 


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Answer  - 22 Jul, 2012
DSO = Accounts Receivable/per day sales DSO = 45,000/(450,000/365) = 36.....


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