Milwaukee Surgical Supplies, Inc. .Milwaukee Surgical Supplies, Inc., sells on terms of 3/10, net 30. Gross sales for the year are $1,200,000 and the collections department estimates that 30% of the customers pay on the tenth day and take discounts, 40% pay on the thirtieth day, and remaining 30% pay, on average, 40 days after the purchase. (Assume 360 days /year.) You are to write a 3-7 page report that answers the following:
· Calculate the firm's average collection period.
· Calculate the firm's current receivables balance.
· Calculate the firm's new receivables balance if Milwaukee Surgical toughened up on its collection policy, with the result that all non-discount customers paid on the 30th day.
· Assuming the cost to the firm to carry receivables is 8% per annum, calculate the annual savings resulting from the toughened credit policy. (Assume the entire amount of receivables had to be financed.)
· What is the primary difference between financial statement analysis and operating indicator analysis and why are both types useful to health services managers?
· Describe the mechanics of the market multiple approach to business valuation.