A firm offers terms of 3/15 net 30. Currently two-thrids of all customers take advantage of the trade discount; the remainder pay bill at the due date.
a) What will be the firms typical value for its accounts receivable period?
b) What is the average investment in accounts receivables if annual sales are $20M
c) What would likely happen to the firms accounts receivable period if it changed its terms to 4/15 net 30?