Weir Incorporated has sales of $200,000 and accounts receivable of $18,500. You can easily show that its DSO is well over the industry average of 27 days. Suppose that it speeds up collection, matches the industry average, and manages to earn 8% interest on the cash not tied up in receivables. What would be the savings per year? Assume that sales are not affected by the tighter credit.
a. $241.45
b. $254.16
c. $267.54
d. $281.62
e. $296.44