Response to the following problem:
Net credit position McGriff Dog Food Company normally takes 20 days to pay for average daily credit purchases of $9,000. Its average daily sales are $10,000, and it collects accounts in 25 days.
a. What is its net credit position? That is, compute its accounts receivable and accounts payable and subtract the latter from the former.
b. If the firm extends its average payment period from 20 days to 32 days (and all else remains the same), what is the firm's new net credit position? Has it improved its cash flow?