DSO and accounts receivable Ingraham Inc. currently has $205,000 in accounts receivable, and its days sales outstanding is 71 days. It wants to reduce its DSO to 20 days by pressuring more of its customers to pay their bills on time. If this policy is adopted, the company's average sales will fall by 15%. What will be the level of accounts receivable following the change? Assume a 365- day year.

$49,084.51

Explanation:

days of sales outstanding (DSO) = accounts receivable / average daily sales

71 days = $205,000 / (total sales / 365 days)

total sales / 365 days = $205,000 / 71 days

total sales = ($205,000 / 71 days) x 365 days = $1,053,873.24

after the change, annual sales will decrease by 15%:

$1,053,873.24 x (1 - 15%) = $895,792.25

average sales per day = $895,792.25 / 365 = $2,454.23 per day

new DSO = accounts receivable / average sales per day

20 days = accounts receivable / $2,454.23 per day

accounts receivable = $2,454.23 per day x 20 days = $49,084.51

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know