Les Payne, an anesthesiologist, is experiencing significant cash flow problems, and has a major alimony payment due. His accounts receivable turnover is 4.3. Les needs your professional help to explain to him some options that will improve his accounts receivable turnover in his business. He has the following questions:
a. I do not understand this 4.3 accounts receivable turnover result. Could you tell me how many days on average it is taking clients to pay me?
b. What can I do to motivate these clients to pay me sooner? I need the cash!
c. If I borrow some c ash at the bank will it affect the ratio?
d. Does this ratio result include those customers that pay me in cash?
e. If Les offers terms of n/45, how does this turnover rate of 4.3 relate to the n/45? Explain.